<PAGE>                        Page 2

                           UNITED STATES
                 SECURITIES AND EXCHANGE COMMISSION
                       Washington, D.C. 20549

                         AMENDED FORM 10-K

[X]  ANNUAL  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)

           For the fiscal year ended September 30, 1996.

                                 OR

[  ]  TRANSITION  REPORT  PURSUANT TO SECTION  13  OR  15(d)  OF  THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

        For the transition period from ________ to ________

                  Commission file number 33-36775.

                      SUMMIT SECURITIES, INC.
       (Exact name of registrant as specified in its charter)

         IDAHO                           82-0438135
(State or other jurisdiction of       (I.R.S. Employer
incorporation or organization)      Identification No.)

        WEST 929 SPRAGUE AVENUE, SPOKANE, WASHINGTON   99204
     (Address of principal executive offices)       (Zip Code)

Registrant's telephone number, including area code: (509)838-3111

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate  by  check  mark whether the registrant (1)  has  filed  all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange  Act  of 1934 during the preceding 12 months  (or  for  such
shorter  period  that  the  registrant  was  required  to  file  such
reports),  and  (2) has been subject to such filing requirements  for
the past 90 days.  Yes X   No

Indicate by check mark if disclosure of delinquent filers pursuant to
Item  405 of Regulation S-K is not contained herein, and will not  be
contained, to the best of registrant's knowledge, in definitive proxy
<PAGE>                        Page 3

or  information statements incorporated by reference in Part  III  of
this Form 10-K or any amendment to this Form 10-K. [x]

State  the  aggregate market value of the voting stock held  by  non-
affiliates of the registrant: Not Applicable

Indicate  the  number of shares outstanding of each of  the  issuer's
classes of common stock, as of September 30, 1996
     Single Class: 10,000 shares

Documents incorporated by reference:  None.

<PAGE>                        Page 4


                               PART I
Item 1. Business

Definitions:

      For  ease of reading, the following is a compilation of several
of  the  defined  terms which appear regularly within this  document.
Also, See "BUSINESS".

Arizona Life:  Arizona Life Insurance Company

Certificates:   Where  this  term is capitalized  it  refers  to  the
Investment Certificates being offered herein.  Where not capitalized,
it refers to certificates generally.

Consolidated  Group:   This term refers to  the  combined  businesses
consisting of Summit and all subsidiaries.

MIS:  Metropolitan Investment Securities, Inc.

Metropolitan:  Metropolitan Mortgage & Securities Co., Inc., Summit's
former  parent company.  Also See "BUSINESS" & "CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS".

Metwest:    Metwest   Mortgage  Services  Inc.,   a   subsidiary   of
Metropolitan.   Also  See  "BUSINESS" &  "CERTAIN  RELATIONSHIPS  AND
RELATED TRANSACTIONS".

Old Standard:  Old Standard Life Insurance Company.

Preferred  Stock:  Where this term is capitalized it  refers  to  the
Series  S-3  Preferred Stock being offered herein. Where  it  is  not
capitalized, it refers to preferred stock generally.

Receivables:   Investments in cash flows, consisting  of  obligations
collateralized  by  real  estate, structured settlements,  annuities,
lottery prizes and other investments.

Summit:  Summit Securities, Inc.

Western  United: Western United Life Assurance Company, a  subsidiary
of Metropolitan.
                                  
<PAGE>                        Page 5
                                  
                              BUSINESS
                                  
INTRODUCTION

       The   Consolidated  Group  consists  of  Summit,  and  several
subsidiaries including insurance companies (Old Standard and  Arizona
Life),  a  securities broker/dealer (MIS), and a property development
services company (Summit Property Development).  Summit, Old Standard
and  Arizona  Life  are  engaged  in the  business  of  investing  in
Receivables and other assets through funds provided by annuity sales,
Receivable  investment proceeds, certificate sales,  preferred  stock
sales,  sales  of  Receivables and the  resale  of  repossessed  real
estate.   The  Consolidated Group's goal is  to  achieve  a  positive
spread  between the return on its Receivable investments,  and  other
investments and its cost of funds.  Summit may also engage  in  other
businesses or activities without restriction in accordance  with  the
provisions of its Articles of Incorporation.

      Summit was originally organized as a wholly-owned subsidiary of
Metropolitan.   On  September  9,  1994,  Metropolitan  and  C.  Paul
Sandifur,  Jr.  completed a sale of the common  stock  of  Summit  to
National  Summit  Corp.  National Summit Corp. is a  holding  company
wholly-owned  by  C. Paul Sandifur Jr.  Mr. Sandifur holds  effective
control  of  Metropolitan.   Prior to the  sale,  Mr.  Sandifur  held
effective  control  of Summit, through Metropolitan.   Following  the
sale,  Mr.  Sandifur continues to hold effective  control  of  Summit
through National Summit Corp.  See "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS".

     On January 31, 1995, Summit acquired a securities broker/dealer,
MIS,  from Metropolitan.  Also, on January 31, 1995, Summit  Property
Development,  Inc.  commenced  operations,  providing   real   estate
development  services  to  Metropolitan and  its  subsidiaries.   See
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS".

     On May 31, 1995, Summit, through a wholly-owned holding company,
purchased Old Standard from Metropolitan.  See "CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS".

      On  June  1,  1995, Old Standard entered into a Stock  Purchase
Agreement with ILA Financial Services, Inc. to acquire Arizona  Life,
an  insurance  company  domiciled in Arizona.   The  acquisition  was
completed on December 28, 1995.  Arizona Life had been inactive since
approximately August 1994, except to the extent necessary  to  retain
its  licenses.   Arizona Life holds licenses to engage  in  insurance
sales  in seven states.  Obtaining access to these additional markets
was  the  principal purpose for the purchase.  During  1996,  Arizona
Life
<PAGE>                        Page 6

commenced annuity sales and investing in Receivables, similar to  the
activities  of  Old  Standard.  See "BUSINESS-Annuity  Operations"  &
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS".

      As  of September 30, 1996, Summit's personnel consisted of  its
officers   and  directors,  an  accountant  and  an  attorney.    See
"MANAGEMENT".   Most  of  those  individuals  are  also  employed  by
Metropolitan.  It is anticipated that the Metropolitan employees will
continue  to  devote substantially all of their time to their  duties
related to their respective positions with Metropolitan and its other
affiliates subject to the necessary commitment of time to ensure that
Summit  fulfills  its obligations to Preferred Shareholders  and  its
duties  under  the Indenture pursuant to which it issues Certificates
and such other duties and responsibilities as Summit may undertake in
the  conduct  of  its  business or as may be  required  by  law.   No
additional  Summit  employees are expected to be necessary  or  hired
during the foreseeable future.

      As  of  December 31, 1996, Old Standard had six  employees  who
perform  the  annuity processing and servicing activities.   On  that
same  date, Summit Property Development's staff consisted of nineteen
employees,   while  MIS  had  eleven  staff  employees,  and   thirty
registered representatives.

RECEIVABLE INVESTMENTS

      Metropolitan  provides  management and  Receivable  acquisition
services  for  a  fee  to  Summit, Old Standard,  and  Arizona  Life.
Metropolitan  has been investing in Receivables for its  own  account
for  over  forty years. The evaluation, underwriting, and closing  is
performed at Metropolitan's headquarters in Spokane, Washington.  The
Receivable   acquisition  fees  are  based  upon  yield  requirements
established  by  each company.  Each company pays, as its  Receivable
acquisition service fee, the difference between the yield requirement
and  the  yield  which  Metropolitan  actually  negotiates  when  the
Receivable  is  acquired.  In 1996, the Consolidated  Group  incurred
fees  for  Receivable acquisitions from Metropolitan of approximately
$1,753,000.

      Metwest,  a  subsidiary  of Metropolitan,  provides  Receivable
collection and servicing for a fee to Summit, Old Standard  Life  and
Arizona  Life.   During 1996, the Consolidated Group paid  Receivable
collection and servicing fees of approximately $290,000.

      Management  believes  that  the terms  and  conditions  of  the
agreements with Metropolitan and Metwest are at least as favorable to
members  of  the  Consolidated Group as those that  could  have  been
obtained by a non-affiliated third party.  The agreements are non-
<PAGE>                        Page 7

exclusive  and  may be terminated in whole or part by  prior  written
notice to the other party.

      The  Consolidated Group's Receivable acquisitions  include  two
principal types of Receivables: 1)Receivables collateralized by  real
estate  and  2)lotteries, structured settlements and annuities.   The
majority  of the real estate Receivables are collateralized by  first
position  liens  on  single family residences,  including  land  with
mobile homes, and condominiums.  To a lesser extent, the Consolidated
Group  acquires Receivables collateralized by commercial real  estate
and   undeveloped   land.   In  addition,  it  acquires   Receivables
collateralized by second and lower lien positions.

       The  market  for  the  acquisition  of  existing  real  estate
Receivables is commonly referred to as the secondary mortgage market.
The   private  secondary  mortgage  market  consists  of   individual
Receivables or small pools of Receivables which are held and sold  by
individual investors.  These Receivables are typically the result  of
seller  financed  sales of real estate.  The institutional  secondary
mortgage market consists of the sale and resale of Receivables  which
were originated or acquired by a financial institution and which  are
sold  in  groups,  commonly  called pools.   The  Consolidated  Group
acquires  Receivables through both the private and the  institutional
secondary mortgage markets.

     The  Consolidated  Group's  real  estate  Receivable  and  other
Receivable investment acquisition activities, grew from approximately
$20.2 million in 1994, to $44.4 million in 1995, to $47.5 million  in
1996.   During  1996, the average monthly acquisition volume  was  in
excess of $3.9 million.
     
Metropolitan's  Receivable  Acquisitions:  Sources,  Strategies   and
Underwriting

      The  following information describes Metropolitan's  Receivable
acquisition  and  underwriting procedures as  of  the  date  of  this
prospectus.  These practices may be amended, supplemented and changed
at  any  time  at the discretion of Metropolitan and the Consolidated
Group.

      Generally, the real estate Receivables acquired by Metropolitan
consist  of  non  conventional, "B/C" credit loans.  These  types  of
Receivables   possess   characteristics   which   differ   from   the
conventional  lending  market in that  either  the  borrower  or  the
property  would not qualify for "A" credit grade lending.  The  "B/C"
credit  market  requires  that  the lender  focus  not  only  on  the
borrowers' ability to pay, but also the quality of the collateral  as
the ultimate recourse in the event of the borrower's default.

<PAGE>                        Page 8


     Private Secondary Mortgage Market Sources

      Currently,  the  majority  of  Metropolitan's  Receivables  are
acquired   through  the  private  secondary  mortgage  market.    See
"Business-Current   Mix  of  Receivable  Investment"    This   market
principally  consists  of  loans which were  originated  through  the
seller   of   a   property  financing  the  purchaser's  acquisition.
Metropolitan's  principal source for private market  Receivables  are
independent  brokers  located throughout the  United  States.   These
independent  brokers typically deal directly with private individuals
or organizations who own and wish to sell a Receivable.

     Private Market Acquisition Strategies

      Metropolitan's private secondary market acquisition strategy is
designed to provide flexible structuring and pricing alternatives  to
the   Receivable  seller,  and  quick  closing  times.   Metropolitan
believes  these are key factors to Metropolitan's ability to  attract
and  purchase quality Receivables.  In order to enhance its  position
in this market Metropolitan is implementing the following acquisition
strategies:  1)centralizing of acquisition activities,  2)  expanding
the  use of Metropolitan's Receivable submission software, BrokerNet,
3) designing and implementing flexible Receivable acquisition pricing
options, 4) designing and implementing fast closing programs, and  5)
designing and implementing broker incentive programs.

     1)   Centralization of acquisition activities:
     
      Currently, the Receivable brokers contact one of Metropolitan's
branch  offices to submit the Receivable for evaluation.  During  the
first two quarters of fiscal 1997, Metropolitan plans to close all of
its  branch  offices  and  in turn plans  to  expand  the  Receivable
acquisition  staff  at its home office, in Spokane Washington,  which
will be called the Contract Negotiation Center.  This change is being
made  to  decrease contract costs, as branch offices  are  no  longer
necessary for identification of appropriate contracts to acquire  due
to  existing contacts with brokers; to increase the closing speed due
to  the  ability to centralize acquisition decisions; and  to further
decrease  acquisition costs through the use of technological advances
including the newly developed BrokerNet software.

     2) BrokerNet software:

      BrokerNet was developed by Metropolitan to enhance its position
in   the  private  secondary  mortgage  market,  principally  through
streamlining submissions, underwriting and the closing  process.   It
is
<PAGE>                        Page 9

a  menu  driven software program which assists brokers  in  preparing
accurate and complete Receivable submissions.  It is designed to meet
Metropolitan's  submission requirements.  In  addition,  the  program
assists  in  analyzing  the characteristics of  the  Receivable,  and
provides  online  purchase price quotes based upon  the  Receivable's
characteristics and Metropolitan's yield requirements.

     This  software was first available for online use by brokers  in
March  1996.   Current  plans  for enhancing  the  software  include:
preparing   the  legal  documents  used  to  purchase  a  Receivable,
providing   internet  compatibility,  providing   submission   status
tracking  (expected to be available mid 1997), assist  in  monitoring
the  closing  of a Receivable purchase and ultimately,  transfer  the
Receivable data directly into the Receivable servicing and collection
system.
     
       Currently,  approximately  35%  of  the  privately   purchased
Receivables are submitted to Metropolitan through BrokerNet.   It  is
currently  used  by approximately 15% of the Metropolitan's  brokers.
Management  believes  that this system is more  cost  effective  than
paper  submissions.  Metropolitan plans to encourage  broker  use  of
BrokerNet through various financial incentive programs.  The  current
goal  is  to have 50% of the brokers submitting through BrokerNet  by
the end of fiscal 1997.

     3)      Development of flexible sales options:

      Occasionally,  a  Receivable seller desires a flexible  pricing
structure,  does  not  wish  to sell the entire  Receivable,  or  the
purchase  of the entire Receivable exceeds Metropolitan's  investment
to  collateral value underwriting standards.  In these circumstances,
Metropolitan has developed several options.  Currently, the principal
options  include 1)"partial" acquisitions, 2) multiple stage payouts,
and 3) the short life yield programs.

      Partial  purchases  are purchases of the  right  to  receive  a
portion of the Receivable's balance where the seller's right  to  the
unsold  portion of the Receivable is subordinated to the interest  of
Metropolitan  or  the company for which Metropolitan  negotiated  the
purchase.   Partials  include the purchase  of  the  next  series  of
payments (an immediate partial), the purchase of future payments or a
balloon  payment (a reverse partial) or the purchase of a portion  of
each  payment  (a  split partial).  Partials generally  result  in  a
reduced level of investment and commensurate reduction in the risk to
the purchaser than if the entire Receivable cash flow is purchased.

      The  multiple  stage payout and short yield life  programs  are
pricing programs designed to satisfy variations in seller needs.  The
multiple stage payout involves the payment of the Receivable purchase
<PAGE>                        Page 10

price  through installment payments over time.  The short life  yield
program   is   available   for   "A"   credit   quality   Receivables
collateralized  by  owner  occupied single family  residences.   This
program  prices the acquisition assuming that the loan  will  balloon
with a full payoff in ten years.

     4) Development of faster closing programs:

     Metropolitan has developed several submission programs which are
designed to reduce closing times.  The principal program consists  of
the  Fast  Track  submission program which requires that  the  broker
obtain  and  submit  a  Receivable with a  current  appraisal,  title
policy,  and  all  other  documents  and  verifications  required  to
analyze,  evaluate and close the transaction.  Metropolitan  attempts
to close all accepted Fast Track submissions within seven days.

     5) Broker Incentive Programs:

       In  order  to  maintain  strong  professional  ties  with  its
independent  brokers,  Metropolitan held its  first  annual  Broker's
Convention during the summer of 1994.  The second such convention  is
currently   planned  for  mid  1997.   In  addition,  various   bonus
commission  and incentive programs as well as streamlined  Receivable
submission  procedures  have  been  developed  and  continue  to   be
developed in order to reduce closing times.

      Currently,  the principal incentive programs are the  wholesale
pricing  program  and  the  Premier Broker  Program.   The  wholesale
pricing   program  requires  that  brokers  pay  the  cost   of   the
Receivable's  title  policy and appraisal.  In  return,  Metropolitan
reduces  its  yield  requirement (currently by  .25%).   Through  the
Premier Broker program, Metropolitan pays volume brokers a bonus  for
every  $250,000 in closed Receivable acquisitions.  For Brokers whose
volume  exceeds one million annually, Metropolitan reduces its  yield
requirement (currently by .25%) for all future acquisitions from  the
qualifying  premier broker.  Both of these programs are  designed  to
provide an incentive to the volume broker to submit their Receivables
to   Metropolitan.   Volume  brokers  are  often  efficient  in   the
Receivable  packaging and submission, which can  result  in  a  lower
acquisition processing cost.

     Private Secondary Mortgage Market Underwriting

      Because Receivables in the private market are generally  seller
financed  transactions, these Receivables are  typically  subject  to
terms  and  conditions which were negotiated to  satisfy  the  unique
needs  of  the  particular private buyer and seller.  Therefore,  the
underwriting of these loans requires careful evaluation of  the  loan
documentation and terms. Metropolitan's acquisition of these
<PAGE>                        Page 11

Receivables  should  be distinguished from the conventional  mortgage
lending business which involves standardized documentation and terms,
substantial first-hand contact by lenders with each borrower and  the
ability  to obtain an interior inspection appraisal prior to granting
a loan.  Management believes that the underwriting functions that are
employed in its private secondary mortgage market acquisitions are as
thorough  as  reasonably possible considering the characteristics  of
the  Receivables, and considering the volume of Receivables submitted
for review.

      When  Metropolitan is offered a Receivable through the  private
secondary  mortgage market, the Receivable information is transmitted
to  one  of  Metropolitan's contract buyers either through an  online
BrokerNet  submission  or  a  traditional  paper  submission.   Paper
submissions  are  input  by the contract buyers  into  the  BrokerNet
system.   The  contract  buyer makes an  initial  evaluation  of  the
Receivable's   characteristics  to  verify  that  it  satisfies   the
requirements for the particular type of submission.

      If  the  Receivable  appears acceptable,  it  is  entered  into
Metropolitan's  submissions tracking system,  and  forwarded  to  the
demography  department.  The demography department  uses  a  national
computerized  database to identify local trends in  property  values,
personal income, population and other economic indicators.

      The Receivable is then forwarded to the Underwriting Committee.
Metropolitan's   underwriting  team   currently   consists   of   six
individuals  with  a combined experience of ninety  years  evaluating
seller  financed Receivables.  Receivables of $100,000  or  less  are
evaluated  by individual underwriters.  Loans exceeding  that  amount
are   reviewed  by  a  committee  of  at  least  three  underwriters.
Additionally,   underwriters  may  obtain  a  team  review   of   any
Receivable.

      The underwriters evaluate the proposed investment to collateral
value, the payor's credit and payment history, the interest rate, the
demographics of the region where the collateral is located,  and  the
potential  for  environmental risks.  Currently,  the  ratio  of  the
investment  in  a  Receivable compared to the value of  the  property
which collateralizes the Receivable generally does not exceed 70%-80%
(depending  upon  acquiring company, collateral type  and  collateral
quality)  on  Receivables collateralized by single family residences;
30-70%  on  Receivables  collateralized by other  types  of  improved
property  such  as  commercial property; and 55% on unimproved  land.
Management  believes  these collateral ratio  requirements  generally
provide higher than conventional levels of collateral to protect  the
purchasing  company's  investment in the event  of  a  default  on  a
Receivable.


<PAGE>                        Page 12

       Receivable   investments  which  the  Underwriting   Committee
identifies  for legal review are referred to Metropolitan's  in-house
legal  department which currently includes a staff of five attorneys.
Receivables  which  exceed  specified amounts  are  submitted  to  an
additional  special  risk evaluation review.  The  investment  amount
which  gives  rise to special risk evaluation is dependent  upon  the
type   and   quality  of  collateral,  ranging  from   $250,000   for
conventionally  financable  residential  property  to  $100,000   for
residential  property which is not owner occupied, and  $150,000  for
Receivables collateralized by commercial property.

       Based   upon   Metropolitan's  underwriting  guidelines,   the
underwriters may approve the acquisition or change the terms  of  the
acquisition,  such as limiting the acquisition to a partial  purchase
in order to decrease the acquiring company's investment risk.  If the
terms  are  changed,  the contract buyer is  notified,  who  in  turn
contacts   the  broker  to  renegotiate  the  purchase  terms.    The
underwriters  may  also approve the loan subject to  certain  closing
criteria.    If  the  broker  and/or  seller  accepts  the   proposed
transaction,  a written agreement to purchase is executed,  which  is
subject to Metropolitan's full underwriting requirements.

      Once  the Receivable has been approved in principle, a  current
market valuation of the collateral is obtained in order to verify the
investment to collateral value.  These valuations can consist of  1)a
valuation from a statistical valuation service, 2) an appraisal by  a
licensed  independent  appraiser  or  3)  an  appraisal  by  one   of
Metropolitan's licensed staff appraisers.

     Statistical valuations are available in the majority of counties
in  the  United States.  They are based upon property characteristics
and  sales  trends  which can be analyzed through computer  modeling.
The  cost of statistical valuations average approximately $35 and are
available  virtually instantly, compared to a cost  of  approximately
$250  for  standard appraisals and a wait of generally seven  to  ten
working  days before the appraisal is completed.  Metropolitan  began
using statistical valuations in 1996.  Metropolitan limits its use of
statistical  valuations to properties with low  investment  to  value
ratios   and   single  family  residential  properties.    Currently,
Metropolitan  is  monitoring the quality of the statistical  services
through obtaining post closing traditional appraisals on a minimum of
10% of the acquisitions.

      When  traditional appraisals are obtained, they  are  generally
based  on  a  drive-by inspection of the collateral  and  comparative
sales analysis.  The appraiser generally does not have access to the
<PAGE>                        Page 13

property for an interior inspection.  Each statistical valuation  and
independent  appraisal  is  also  subject  to  review  by   a   staff
appraiser.

      The  approved Receivable is provided to Metropolitan's  closing
department where the property title is evaluated, the legal documents
are  reviewed and the appraisal is reviewed.  If the closer discovers
any  material  discrepancies during the closing  review,  or  if  the
Receivable does not satisfy any specified closing contingencies,  the
Receivable  is  re-submitted to the underwriting  committee  for  re-
evaluation.   Upon  completion of the underwriting  process  and  the
closer's  review,  appropriate closing  and  transfer  documents  are
executed  by  the  seller  and/or  broker,  transfer  documents   are
recorded, and the transaction is funded.
     
     Institutional Secondary Mortgage Market Sources

       During  fiscal  1996,  the  Consolidated  Group  invested   an
immaterial   amount  in  institutional  acquisitions   (approximately
$70,000).    However,   as   profitable  opportunities   arise,   the
Consolidated  Group may make such acquisitions in increasing  amounts
in  the  future.   These  portfolios of real estate  Receivables  are
acquired  from banks, savings and loan organizations, the  Resolution
Trust  Corporation and the Federal Deposit Insurance Corporation  and
other financial institutions.

     An institutional seller typically offers a loan pool for sale in
order  to  provide  liquidity,  to meet regulatory  requirements,  to
liquidate  assets,  or  other  business  reasons.   Over  the  years,
Metropolitan has built relationships with several brokers and lenders
who   provide  a  regular  flow  of  potential  acquisitions  to  the
institutional secondary department.  In addition, other brokers learn
about  Metropolitan  through word of mouth and  contact  Metropolitan
directly.   Finally, some leads on loan pools are generated  by  cold
calling lending institutions or brokers.

      These  acquisitions  are  typically negotiated  through  direct
contact  with  the  portfolio  departments  at  the  various  selling
institutions, or acquired through bidding at an auction.  The closing
costs per loan for institutional acquisitions is generally lower than
private   secondary  mortgage  market  acquisitions.   However,   the
investment yield is also generally lower than yields available in the
private  market.   During  fiscal  1996,  approximately  25%  of  the
institutional  purchases were acquired from FSB Mortgage  Company  (a
subsidiary of Federal Savings Bank of Rogers, Arkansas.)

     Institutional Secondary Mortgage Market Underwriting

      Receivables acquired through the institutional mortgage  market
differ from those acquired in the private market in that these
<PAGE>                        Page 14

Receivables  were  generally originated by a  financial  institution,
applying    standard   underwriting   practices   and    standardized
documentation.  Generally, the seller provides an initial summary  of
the  pool  which typically includes the pool balance, the  number  of
loans,  the  weighted  average interest rate,  the  weighted  average
maturity,  weighted average loan-to-value ratio, delinquency  status,
collateral   addresses,  collateral  types,   and   lien   positions.
Receivable   pools  are  initially  reviewed  by  the   institutional
secondary  market  staff who determine whether  the  pool  yield  and
characteristics  are  within the current acquisition  guidelines  and
yield requirements.

      The  pool  characteristics and yield are then reviewed  by  the
Underwriting Committee.  If approved by the Underwriting Committee, a
letter   of  intent  is  executed  and  the  institutional  secondary
marketing staff perform a due diligence review of the loan pool which
generally includes: 1) review of the documentation in each individual
loan  file,  2) determination of the payment history and  delinquency
pattern  of  the loans, 3) determination of the individual  and  pool
loan-to-value   ratios,   and   maturity   characteristics   and   4)
determination of the economics and demography for the geographic area
where  the collateral is located. If the appraisal is over  one  year
old,  a  new  statistical valuation or traditional appraisal  of  the
collateral   is   generally  obtained.    Any   exceptions   in   the
documentation or Receivable characteristics are noted during the  due
diligence  review.  A summary of exceptions, as determined  from  the
due diligence, is provided to the seller to resolve prior to closing.
If the exception(s) cannot be resolved, the corresponding loan(s) may
be  removed from the pool, the terms of the acquisition renegotiated,
or  the  transaction  canceled.   Following  completion  of  its  due
diligence,  and acceptable resolution of any exceptions,  a  purchase
and  sale  agreement is executed and the acquisition  is  funded  and
closed.   Generally, these acquisitions are acquired  with  servicing
released.

     Loan Originations Sources

       During   the  last  quarter  of  fiscal  1996,  Metropolitan's
subsidiary,  Metwest, began originating residential loans  and  small
commercial  loans.   The  commercial  lending  focuses  on  loans  of
$1,500,000 or smaller.  Metwest is currently licensed as a lender  in
twenty six states.  Metwest plans to expand its activities throughout
the  United  States  during  fiscal 1997.  Metwest  originates  loans
through  licensed  mortgage brokers who submit loan  applications  on
behalf  of  the  borrower.  Before Metwest will enter into  a  broker
agreement,  the mortgage broker must demonstrate that it is  properly
licensed,  experienced and knowledgeable in lending.  The  volume  of
Metwest's lending activities were immaterial in fiscal 1996.   Actual
growth  of  this  new  venture cannot be  predicted  with  certainty;
however, Metwest is currently originating $2-3 million in residential
<PAGE>                        Page 15

loans  per  month.   It  is currently projected  that  Metwest  could
originate as much as approximately $8-10 million in residential loans
per  month  by  fiscal year end which, could amount  to  as  much  as
approximately  30%  of the Consolidated Group's Receivable  investing
activities  by  the  end  of  in fiscal 1997.   Metwest's  commercial
lending   activities  are  currently  in  the  initial  phases,   and
management  is  unable  to predict with any level  of  certainty  the
volume  of  commercial  loans which may be originated  during  fiscal
1997.

     During fiscal 1996, the Consolidated Group did not invest in any
loans  originated  by Metwest.  However, as profitable  opportunities
arise,  the  Consolidated  Group may make such  acquisitions  in  the
future.

     Loan Originations Underwriting

      Loans  originated by Metwest are underwritten applying criteria
which  include  the  following: evaluation of the borrower's  credit,
obtaining a current appraisal of the collateral, and obtaining  title
insurance.   The  borrower's credit determines the down  payment  and
interest  rate  which  Metwest will require.  A lower  credit  rating
would  result  in a higher required down payment and higher  interest
rate.   Metwest will lend up to 90% of the collateral's value on  "A"
credit  borrowers,  which decreases to 70% for "D" credit  borrowers.
Unlike  the  Receivables purchased in the private secondary  mortgage
market,  the  loans originated by Metwest have standard documentation
and   terms.    Currently,  Metwest  originates  fixed  rate   loans.
Residential loans up to $207,000 are evaluated by an individual  loan
underwriter.  Loans in excess of $207,000 require the approval of two
approved underwriters.

     Lotteries, Structured Settlements and Annuities Sources

      Metropolitan also negotiates the purchase of Receivables  which
are   not   collateralized  by  real  estate,  such   as   structured
settlements,  annuities  and  lottery  prizes.   The  lottery  prizes
generally  arise  out  of  state operated  lottery  games  which  are
typically  paid  in  annual installments to the  prize  winner.   The
structured settlements generally arise out of the settlement of legal
disputes  where  the  prevailing party is awarded  a  sum  of  money,
payable over a period of time, generally through the creation  of  an
annuity.   Other  annuities generally consist  of  investments  which
cannot  be  cashed  in directly with the issuing  insurance  company.
Metropolitan's  source  for these investments  is  generally  private
brokers who specialize in these types of Receivables.

     Lottery, Structured Settlement and Annuity Underwriting


<PAGE>                        Page 16

      In  the  case  of structured settlement annuity purchases,  the
underwriting guidelines of Metropolitan generally include a review of
the  settlement  agreement.  In the case of  all  annuity  purchases,
Metropolitan's underwriting guidelines generally include a review  of
the  annuity  policy,  related documents, the credit  rating  of  the
annuity seller, the credit rating of the annuity payor (generally  an
insurance  company), and a review of other factors  relevant  to  the
risk  of  purchasing  a particular annuity as deemed  appropriate  by
management in each circumstance.  Typically, Metropolitan limits  its
acquisition  of structured settlements and annuities to the  purchase
of a maximum of the next seven year's payments.

      In  the  case  of  lottery prizes, the underwriting  guidelines
generally  include a review of the documents providing proof  of  the
prize, and a review of the credit rating of the insurance company, or
other  entity, making the lottery prize payments.  Where the  lottery
prize  is  from  a  state  run lottery, the  underwriting  guidelines
generally   include  a  confirmation  with  the  respective   lottery
commission  of  the  prize winner's right  to  sell  the  prize,  and
acknowledgment from the lottery commission of their receipt of notice
of the sale.  In many states, in order to sell a state lottery prize,
the  winner must obtain a court order permitting the sale.  In  those
states, Metropolitan requires a certified copy of the court order.

Yield and Discount Considerations

      Summit, Old Standard and Arizona Life each establish their  own
yield  requirements for Receivable acquisitions.  Yield  requirements
are  established  in light of capital costs, market  conditions,  the
characteristics of particular classes or types of Receivables and the
risk  of  default  by  the  Receivable payor.   See  Also  "BUSINESS-
RECEIVABLE    INVESTMENTS-Underwriting".    Each   company's    yield
requirements   are   provided  to  Metropolitan,   which   negotiates
Receivable  purchases  at prices calculated to  provide  the  desired
yield.   If  the  Receivable is purchased at a price below  its  face
amount, the difference is the "discount".

      For Receivables of all types, the discounts originating at  the
time of purchase, net of capitalized acquisition costs, are amortized
using   the   level  yield  (interest)  method  over  the   remaining
contractual  term  of  the  contract.   For  Receivables  which  were
acquired  after September 30, 1992, these net purchase discounts  are
amortized  on  an  individual contract basis using  the  level  yield
method  over  the  contractual remaining life of the  contract.   For
those Receivables acquired before October 1, 1992, these net purchase
discounts  were pooled by the fiscal year of purchase and by  similar
contract  types, and amortized on a pool basis using the level  yield
method  over  the  expected remaining life of the  pool.   For  these
Receivables, the
<PAGE>                        Page 17

amortization period, which is approximately 78 months, is based on an
estimated  constant  prepayment rate of 10-12  percent  per  year  on
scheduled  balances,  which  is  consistent  with  Summit's  and  Old
Standard's   prior   experience  with   similar   loans   and   their
expectations.

      Management  establishes the yield requirements  for  Receivable
investments by assuming that all payments on the Receivables will  be
made and that a certain percentage of unpaid balances will be prepaid
on  an  annual basis (13% for fiscal 1996).  During fiscal 1996,  the
Consolidated Group's average initial yield requirement  was  9.5%  to
12.75%,  for Receivables collateralized by real estate.  However,  to
the  extent that Receivables are purchased at a discount and payments
are  received earlier than anticipated, the discount is  earned  more
quickly  resulting  in an increase in the yield. Conversely,  to  the
extent  that  payments  are  received  later  than  anticipated,  the
discount is earned less quickly resulting in a lower yield.

       A  greater  effective  yield  can  also  be  achieved  through
negotiating amendments to the Receivable agreements. These amendments
may  involve  adjusting  the interest rate and/or  monthly  payments,
extension of financing in lieu of a required balloon payment or other
adjustments in cases of delinquencies where the payor appears able to
resolve  the  delinquency.   In addition,  extensions  of  additional
credit and/or refinancing of the Receivable may be negotiated.  As  a
result  of  these  amendments, the cash flow  may  be  maintained  or
accelerated,  the latter of which increases the yield realized  on  a
Receivable purchased at a discount.

Current Mix of Receivable Investment Holdings

      The  Consolidated  Group's investments in Receivables  includes
Receivables  collateralized by first or second  liens,  primarily  on
single  family residential property.  Management believes that  these
Receivables present lower credit risks than a portfolio of  mortgages
collateralized  by commercial property or unimproved land,  and  that
much  of the risk in the portfolio is dissipated by the large numbers
of  relatively  small  individual Receivables  and  their  geographic
dispersion.

      The following table presents consolidated information about the
Consolidated  Group's  investments in Receivables  collateralized  by
real estate, as of September 30, 1996 and 1995:

<TABLE>
<CAPTION>
                                         1996              1995
<S>                                  <C>            <C>
Face value of discounted

<PAGE>                        Page 18

Receivables                          $73,226,348    $51,768,999

Face value of originated
and non-discounted
Receivables                           10,439,736     10,560,249

Unrealized discounts,
net of unamortized
acquisition costs                     (4,733,938)    (2,614,937)

Allowance for losses                    (974,487)      (765,130)

Accrued interest
receivable                             2,051,094      1,168,038
                                     -----------    -----------
Carrying value                       $80,008,753    $60,117,219
                                     ===========    ===========
</TABLE>

      As of September 30, 1996, approximately 87% of the Consolidated
Group's  investments in Receivables are collateralized by first  lien
positions  on  real  estate and 13% in second  lien  positions.   The
Receivables   are   collateralized  by  residential,   business   and
commercial   properties  with  residential  collateral   representing
approximately 69% of such investments as of September 30, 1996.

      The  Consolidated Group's Receivable investments in real estate
loans at September 30, 1996 were collateralized by properties located
throughout the United States with not more than 3% (by dollar amount)
in any single state except as follows:

                Arizona . . . . . .   9%
                California  . . . .  15%
                Oregon  . . . . . .   7%
                Texas . . . . . . .  10%
                Washington  . . . .  11%
                Florida . . . . . .   6%
                New Mexico. . . . .   4%

<PAGE>                        Page 20

                                   SUMMIT SECURITIES, INC.
                                and subsidiaries
                          RECEIVABLES COLLATERALIZED BY REAL ESTATE
                                      September 30, 1996
<TABLE>
<CAPTION>

Less  than 1% of the contracts are subject to variable interest rates.  Interest
rates range from 0% to 19% with rates principally (74% of face value) within the
range  of  8%  to 12%.  The following table segregates the Consolidated  Group's
Receivable portfolio by type, size and lien position.

                           Number                Carrying   Delinquent    Number
of      Non accrual     Number of
                               of        Interest     Amount   of      Principal
Delinquent       Principal     Non Accrual
Description               Receivables      Rates       Receivables        Amount
Receivables       Amount       Receivables
                       ---------------------------------------------------------
-----------------------------------
RESIDENTIAL                      Principally
<S>                 <C>         <C>         <C>          <C>                 <C>
<C>         <C>            <C>
First Mortgage >$75,000     145      8%-11%      $15,930,198      $828,311     7
$106,799          1
First Mortgage >$40,000     320      8%-11%       17,166,794       803,473    14
--         --
First Mortgage <$40,000     874      8%-11%       16,824,319     1,079,313    45
--         --
Second or Lower>$75,000       8      7%-12%          855,475            --    --
--         --
Second or Lower>$40,000      44      8%-11%        2,256,793       159,931     3
--         --
Second or Lower<$40,000     246      8%-11%        4,940,151       162,486    10
--         --

COMMERCIAL
First Mortgage >$75,000      72      8%-11%       10,626,674        95,843     1
--         --
First Mortgage >$40,000      42      8%-10%        2,371,163       139,722     2
--         --
First Mortgage <$40,000      83      8%-18%        1,110,029         8,389    --
--         --
Second or Lower>$75,000       9      8%-11%          819,760            --    --
--         --
Second or Lower>$40,000       9      9%-11%          520,949            --    --
--         --
Second or Lower<$40,000      17      9%-11%          415,212        38,314     1
--         --

FARM, LAND AND OTHER
First Mortgage >$75,000      26      8%-12%        3,577,173            --    --
--         --
First Mortgage >$40,000      56      8%-11%        2,946,202        59,218     1
--         --
First Mortgage <$40,000     100      8%-11%        2,363,282            --    --
--         --
Second or Lower>$75,000       3      7%-12%          416,737            --    --
--         --

<PAGE>                        Page 21

Second or Lower>$40,000       5      7%-12%          241,564            --    --
--         --
Second or Lower<$40,000      13      8%-10%          283,609            --    --
--         --

Unrealized discounts, net
of unamortized acquisition
costs, on Receivables
purchased at a discount                           (4,733,938)

Accrued Interest Receivable                        2,051,094

Allowance for Losses                                (974,487)
                                                    -----------      -----------
--------
TOTAL                                               $80,008,753       $3,375,000
$106,799
                                                    ===========      ===========
========

<FN>
The  principal  amount  of  Receivables subject  to  delinquent  principal  or
interest  is defined as being in arrears for more than three months but  which
are  still accruing interest.  The principal amount of Receivables subject  to
the nonaccrual of interest represents those on which the outstanding principal
and interest exceeds the fair value of the collateral, net of selling costs.
</TABLE>

<TABLE>
<CAPTION>

The  contractual  maturities  of the aggregate amounts  of  Receivables  (face
amount) are as follows:

                                    Residential      Commercial   Farm,  Land,
Other    Total
                                  Principal        Principal         Principal
Principal
                                    --------         -------          --------
---------
<S>             <C>               <C>            <C>              <C>         <C>
October  1996 - September 1999    $ 5,120,711   $   2,156,175     $  1,987,478
$ 9,264,364
October  1999  - September 2001      4,740,273       3,048,183       2,170,013
9,958,469
October  2001  - September 2003      5,297,759       1,497,998         939,294
7,735,051
October  2003  - September 2006      8,976,772       3,068,355       1,472,159
13,517,286
October  2006  - September 2011     12,348,635       4,287,359       1,829,649
18,465,643
October  2011  - September 2016      7,034,413         793,847         371,051
8,199,311

<PAGE>                        Page 22

October  2016  - Thereafter         14,455,167       1,011,870       1,058,923
16,525,960
                                  -----------      -----------      ----------
-----------
                                  $57,973,730      $15,863,787      $9,828,567
$83,666,084
                                  ===========     ===========       ==========
===========
</TABLE>

                                   SUMMIT SECURITIES, INC.
                                and subsidiaries
                          RECEIVABLES COLLATERALIZED BY REAL ESTATE
                                      September 30, 1995
<TABLE>
<CAPTION>

Less  than 1% of the contracts are subject to variable interest rates.  Interest
rates range from 0% to 20% with rates principally (87% of face value) within the
range  of  7%  to 12%.  The following table segregates the Consolidated  Group's
Receivable portfolio by type, size and lien position.

                           Number                Carrying   Delinquent    Number
of      Non accrual     Number of
                               of        Interest     Amount   of      Principal
Delinquent       Principal     Non Accrual
Description               Receivables      Rates       Receivables        Amount
Receivables       Amount       Receivables
                       ---------------------------------------------------------
-----------------------------------
RESIDENTIAL                                Principally
<S>                   <C>         <C>          <C>         <C>               <C>
<C>             <C>             <C>
First  Mortgage  >  $75,000       103       7%-12%     $10,750,067      $602,699
5              --             --
First  Mortgage  >  $40,000       268       7%-12%      14,265,052       797,198
14              --             --
First  Mortgage  <  $40,000       924       7%-12%      18,514,619       750,304
46              --             --
Second  or  Lower>  $75,000       13        9%-12%       1,358,974            --
--             --             --
Second  or  Lower>  $40,000        38       8%-12%       2,022,634       226,881
4              --             --
Second  or  Lower<  $40,000      236        8%-11%       5,074,103        49,146
3              --             --

COMMERCIAL
First  Mortgage  >  $75,000       24        9%-11%       2,757,580            --
--             --             --
First  Mortgage  >  $40,000       17        8%-11%         975,626            --
--             --             --
First  Mortgage  <  $40,000       35        8%-11%         739,072        16,855
2             --             --
Second  or  Lower>  $75,000        8        9%-11%       1,087,947            --
--             --             --
Second  or  Lower>  $40,000        9        9%-11%         537,240            --
--             --             --
Second  or  Lower<  $40,000       15        9%-11%         383,437            --
--             --             --

<PAGE>                        Page 23


FARM, LAND AND OTHER
First  Mortgage  >  $75,000        7       10%-12%       1,395,643            --
--             --             --
First  Mortgage  >  $40,000       13        8%-11%         648,812            --
--             --             --
First  Mortgage  <  $40,000       65        9%-11%       1,111,652        14,526
1             --             --
Second  or  Lower>  $75,000        1            0%         217,391       217,391
1             --             --
Second  or  Lower>  $40,000        4        5%-12%         223,881            --
--             --             --
Second  or  Lower<  $40,000       14        8%-10%         265,518            --
--             --             --
Unrealized discounts, net
of unamortized acquisition
costs, on Receivables
purchased at a discount                            (2,614,937)

Accrued Interest Receivable                         1,168,038

Allowance for Losses                                 (765,130)
                                                      ___________    ___________
__________
TOTAL                                              $   60,117,219   $  2,675,000
--
                                                     ============    ===========
==========

<FN>
The  principal  amount  of  Receivables subject  to  delinquent  principal  or
interest is defined as being in arrears for more than three months.
</TABLE>

<TABLE>
<CAPTION>
The  contractual  maturities  of the aggregate amounts  of  Receivables  (face
amount) are as follows:

                                  Residential       Commercial    Farm,  Land,
Other   Total
                                   Principal         Principal       Principal
Principal
                                    --------          -------         --------
---------
<S>                                  <C>               <C>                 <C>
<C>
October  1995  - September 1998   $ 6,935,045    $  1,524,281    $   1,494,409
$ 9,953,735
October  1998  -  September 2000     5,091,289       1,210,602         434,447
6,736,338
October  2000  -  September 2002     3,895,987         680,842         270,919
4,847,748
October  2002  -  September 2005     6,444,955         731,814         440,803
7,617,572

<PAGE>                        Page 24

October  2005  -  September 2010    10,504,342       1,490,854         939,390
12,934,586
October  2010  -  September 2015     6,142,677         192,069         123,111
6,457,857
October  2015  -  Thereafter        12,971,154         650,440         159,818
13,781,412
                                   ----------       ----------      ----------
----------
                                  $51,985,449       $6,480,902      $3,862,897
$62,329,248
                                  ===========       ==========      ==========
==========
</TABLE>

<PAGE>                        Page 25

      The  Consolidated Group held 2072 Receivables collateralized  by
real  estate,  as of September 30, 1996.  The average stated  interest
rate  (weighted  by principal balances) on these Receivables  on  that
date  was  approximately  8.5%.  See Note 2 to Consolidated  Financial
Statements.

Delinquency Experience & Collection Procedures

      The  principal  amount  of Receivables  collateralized  by  real
estate,  held by the Consolidated Group (as a percentage of the  total
outstanding principal amount of such Receivables) which was in arrears
for  more than ninety days at September 30, 1996 was 4.0% compared  to
4.2%  and  3.8% at September 30, 1995 and 1994, respectively.  Because
Receivables purchased by the Consolidated Group are typically  not  of
the same quality as mortgages that are originated for sale to agencies
such as the Federal National Mortgage Association (Fannie Mae), higher
delinquency   rates  are  expected,  which  management  believes   are
generally  offset  by  the  value of the  underlying  collateral.   In
addition, the Consolidated Group maintains an allowance for losses  on
delinquent real estate Receivables, as described below.  As a  result,
management believes losses from resales of repossessed properties  are
generally lower than might otherwise be expected given the delinquency
rates.   In  addition, the Consolidated Group is compensated  for  the
risk associated with delinquencies through Receivable yields that  are
greater than typically available through the conventional, "A", credit
lending markets.

      Metwest provides Receivable collections and servicing to Summit,
Old   Standard  Life  and  Arizona  Life  pursuant  to  the  following
practices:  When  a  Receivable  becomes  delinquent,  the  payor   is
initially  contacted  by letter approximately  seven  days  after  the
delinquency  date.   If the delinquency is not  cured,  the  payor  is
contacted  by  telephone  (generally on the  17th  day  following  the
payment due date). If the default is still not cured (generally within
three  to  six  days  after the initial call),  additional  collection
activity,   including  further  written  correspondence  and   further
telephone  contact,  is pursued.  If these collection  procedures  are
unsuccessful, the account is referred to a committee who analyzes  the
basis  for  default, the economics of the Receivable and the potential
for  environmental risks.  When appropriate, a Phase  I  environmental
study is obtained prior to foreclosure.  Based upon this analysis, the
Receivable is considered for a workout arrangement, further collection
activity, or foreclosure of any property providing collateral for  the
Receivable.   Collection activity may also involve the  initiation  of
legal  proceedings against the Receivable obligor.  Legal proceedings,
when necessary,
<PAGE>                        Page 26

are  generally  initiated within approximately ninety days  after  the
initial  default.  If accounts are reinstated prior to  completion  of
the legal action, then attorney fees, costs, expenses and late charges
are  generally  collected from the payor, or added to  the  Receivable
balance, as a condition of reinstatement.

Allowance for Losses on Receivables

      The  Consolidated Group establishes an allowance for  losses  on
Receivables based on an evaluation of delinquent Receivables.   During
1992, an appraisal policy was adopted which requires annual appraisals
on   properties  collateralizing  delinquent  Receivables   when   the
Receivable balance exceeds a threshold equal to .5% of total assets of
the respective company.  Biannual appraisals are required on all other
delinquent  Receivables  with balances  in  excess  of  $50,000.   The
allowance  for  losses was 1.2%, 1.2% and 0.9% of the  face  value  of
Receivables collateralized by real estate at September 30, 1996,  1995
and 1994, respectively.

      The  established allowances for losses on real estate  contracts
and  mortgage notes receivable include amounts for estimated  probable
losses on receivables determined in accordance with the provisions  of
Statement   of   Financial  Accounting  Standards  (SFAS)   No.   114,
"Accounting  by  Creditors for Impairment of  a  Loan."   The  Company
adopted  this new standard on October 1, 1995, which did  not  have  a
material  effect  on the consolidated financial statements.   Specific
allowances  are established for delinquent receivables, as  necessary,
with  net  carrying  values in excess of $100,000.  Additionally,  the
Company  establishes allowances, based on prior delinquency  and  loss
experience,   for   currently  performing  receivables   and   smaller
delinquent  receivables.  Allowances for losses are based on  the  net
carrying  values  of  the  receivables,  including  accrued  interest.
Accordingly,  the  Company continues interest accruals  on  delinquent
receivables  until  foreclosure,  unless  the  principal  and  accrued
interest  on  the receivables exceed the fair value of the collateral,
net  of  estimated selling costs.  The Company obtains new or  updated
appraisals  on collateral for appropriate delinquent receivables,  and
adjusts  the  allowance for losses, as necessary, such  that  the  net
carrying value does not exceed net realizable value.

The  following  is  an analysis of the allowance for  losses  on  real
estate contacts and mortgage notes receivable.

                                                  September 30,
                                             ---------------------
                                             1996             1995
                                            ------            ------

<PAGE>                        Page 27

Balance, beginning of year              $  765,130        $  250,572
Provision for losses on real
  estate contracts and mortgage
  notes receivable                         212,600           130,950
Additions from acquisition
  of subsidiary                                              310,957
Recoveries/(write-offs)                     (3,243)           99,651
                                        -----------       ----------
                                        $  974,487        $  765,130
                                        ===========       ==========

At September 30, 1996, the net investment in real estate contracts and
mortgage notes receivable for which impairment has been recognized  in
accordance  with  SFAS  114  was  approximately  $110,000,  of   which
approximately  $27,000,  representing the amounts  by  which  the  net
carrying  value  of  the  receivable exceeds the  fair  value  of  the
collateral, has been specifically included in the allowance for losses
on  real estate assets.  Had these receivables performed in accordance
with  their terms, interest income of approximately $2,300 would  have
been recognized during the period of impairment.

The  provision for losses on real estate contracts and mortgage  notes
receivable  is  determined  as the amount required  to  establish  the
allowance  at  the  level  determined in accordance  with  the  policy
described  above.   Because  primarily  all  of  the  receivables  are
collateralized  by real estate, the Company considers its  delinquency
and  loss  experience in determining the likelihood  that  receivables
that are currently performing may become delinquent, and the loss that
may   be   experienced  should  foreclosure  become   the   means   of
satisfaction.   The  Company manages its risk  of  loss  upon  default
through  the underwriting process, which is performed by Metropolitan,
and  requires  a  review of demographics, real estate  market  trends,
property  value and overall economic conditions related  to  the  real
estate  property  collateralizing a receivable.  Management  does  not
expect  that  the  loss  experience related to  the  receivables  will
increase materially during the next full year of operations.

Repossessed Properties

      Summit,  Old  Standard and Arizona Life own various  repossessed
properties  held  for  sale. At September  30,  1996,  23  properties,
acquired  in satisfaction of debt, with a combined carrying amount  of
approximately  $1,191,000  were held,  of  which  the  largest  single
property had a carrying value of approximately $175,000.

Receivable Sales

<PAGE>                        Page 28


      The  Consolidated  Group  sells pools  of  Receivables  when  it
considers it profitable to do so.  Such sales generally occur  through
one of two methods: (1) securitization or (2) direct sales. Management
believes that the sale of Receivables provides a number of benefits by
allowing the Consolidated Group to diversify its funding base, provide
liquidity  and  lower  its cost of funds.  In  addition  to  providing
liquidity  and  profits, the sale of Receivables is a source  of  cash
which  can  be reinvested into additional Receivables.   The  sale  of
Receivables  in  turn  allows the Consolidated Group  to  continue  to
expand its investing activities without increasing its asset size.

      During  May  1996,  Summit  and Old Standard  participated  with
Metropolitan  and  Western United as sellers in the securitization  of
approximately  $122.9  million in Receivables collateralized  by  real
estate,   principally  consisting  of  seller  financed   first   lien
residential   Receivables.    The  second   such   securitization   of
approximately $126.7 million of first lien residential and  commercial
real  estate loan Receivables, of which approximately 54% were  seller
financial  Receivables, occurred in November 1996.  Currently,  it  is
proposed that the next securitization of Receivables collateralized by
real  estate will not occur until the second half of fiscal 1997.  The
Consolidated Group is also evaluating the market, economic  and  legal
implications  of  selling  its  non real  estate  Receivables  through
securitizations.  There can be no assurance that such  securitizations
will be pursued, or if pursued, that they will be profitable.

     Generally,  a  securitization involves the  transfer  of  certain
specified  Receivables to a single purpose trust.   The  trust  issues
certificates  which represent an undivided ownership interest  in  the
Receivables  transferred  to the trust. The  certificates  consist  of
different classes, which include classes of senior certificates, and a
residual  interest  and  may  also  include  intermediate  classes  of
subordinated  certificates.   The rights  of  the  senior  certificate
holders   can  be  enhanced  through  several  methods  which  include
subordination of the rights of the subordinate certificate holders  to
receive  distributions, or the establishment of a  reserve  fund.   In
connection   with   securitizations,  the  senior   certificates   and
subordinate   certificates   are   sold   to   investors,    generally
institutional  investors.  The companies which sold their  Receivables
to  the  trust  receive a cash payment representing  their  respective
interest  in  the  sales  price for the senior  certificates  and  any
subordinate  certificates  sold.  The  selling  companies  receive  an
interest  in  any unsold subordinate certificates, and also  typically
receive an interest in the residual interest.  Such
<PAGE>                        Page 29
     
     interests  are  generally apportioned based upon  the  respective
companies' contribution of Receivables to the pool of Receivables sold
to the trust.
     
     In  the typical securitization structure, the Receivable payments
are  distributed  first  to  the  senior  certificates,  next  to  the
subordinated certificates, if any, and last to the residual interests.
As  a result, the residual interest is the interest first affected  by
any  loss  due to the failure of the Receivables to pay as  scheduled.
The  holders  of the residual interest values such interest  on  their
respective   financial  statements  based  upon  certain   assumptions
regarding  the  anticipated  losses and prepayments.   To  the  extent
actual   prepayments  and  losses  are  greater  or  less   than   the
assumptions,   the  companies  holding  the  residual  interest   will
experience a loss or gain.

      In  the securitizations which occurred in May and November 1996,
the  rights  of  the senior certificate holders were  enhanced  though
subordinating the right of subordinate certificate holders to  receive
distributions  with respect to the mortgage loans to  such  rights  of
senior  certificate  holders.  The selling  companies  retained  their
respective  residual interests.  At September 30, 1996,  the  residual
interests  held  by  Summit  and  Old  Standard  from  the  May   1996
securitization aggregated approximately $233,000.  At the close of the
November  1996  securitization the Consolidated  Group  held  residual
interests aggregating approximately $570,000.

      In  addition  to sales through securitizations, the Consolidated
Group  may  sell  pools of Receivables directly to purchasers.   These
sales are typically without recourse, except that for a period of time
the selling company is generally required to repurchase or replace any
Receivables which do not conform to the representations and warranties
made at the time of sale.  During fiscal 1996, Summit and Old Standard
received  proceeds  of  approximately $7  million  from  the  sale  of
portfolios  of  real  estate  Receivables through  securitization  and
proceeds  of $12.4 million from the direct sale of lotteries.   During
fiscal  1996,  gains  on these securitization and  direct  sales  were
approximately $977,000.

ANNUITY OPERATIONS

Introduction

      The  Consolidated  Group raises significant  funds  through  its
insurance subsidiaries, Old Standard and Arizona Life.

      Old Standard was incorporated in Idaho in 1990, and acquired  by
the Consolidated Group on May 31, 1995. Old Standard had total
<PAGE>                        Page 30

assets  of  approximately $76.5 million at September  30,  1996.   Old
Standard  markets  its  annuity  products  through  approximately  100
independent    sales    representatives   under    contract.     These
representatives may also sell insurance products for other  companies.
Old  Standard  is  licensed  as an insurer in  Idaho,  Montana,  North
Dakota, Oregon and has applied for licenses in Hawaii, Washington  and
Utah.    During  calendar  1995,  the  most  recent  year  for   which
statistical  information  is  available,  In  Idaho,  Old   Standard's
individual  annuity market share was 10.2%, ranking it the number  one
producer of annuities in Idaho during the period.

      The  Consolidated Group acquired Arizona Life  on  December  28,
1995.  Arizona Life had total assets of approximately $2.9 million  at
September 30, 1996.  Arizona Life is licensed in seven western  states
and has applications pending in three additional states.  It commenced
annuity sales and Receivable investing activities during fiscal 1996.

      Management intends to expand the insurance operations into other
states  as  opportunities arise, which may include the acquisition  of
other insurance companies.

      There  is no specific regulatory limitation imposed by Idaho  on
the  percent  of  assets which Old Standard may invest in  Receivables
collateralized by real estate.  As of September 30, 1996, 73.9% of Old
Standard's assets were invested in Receivables collateralized by  real
estate,  and  5.4% in lotteries.  As of September 30, 1996,  52.3%  of
Arizona  Life's assets were invested in Receivables collateralized  by
real  estate.  As of September 30, 1996, the balance of Old Standard's
and   Arizona   Life's   investments  were  invested  in   principally
investment  grade  corporate and government  securities,  but  may  be
invested  into  a  variety of other areas as permitted  by  applicable
insurance regulations.  See "BUSINESS-REGULATION".

      Generally,  loans  which are acquired through the  institutional
secondary  mortgage  market qualify as "mortgage  related  securities"
pursuant  to  the Secondary Mortgage Market Enhancement  Act  (SMMEA).
SMMEA generally provides that qualifying loans may be acquired to  the
same  extent that obligations which are issued by or guaranteed as  to
principal  and interest by the United States government, its  agencies
or  instrumentalities can be acquired.  Such acquisitions  are  exempt
from  certain state insurance regulations including loan to value  and
appraisal regulations.

Annuities

      During the last three years, Old Standard and Arizona Life  have
derived 100% of their premiums from annuity sales.  Management
<PAGE>                        Page 31

believes  that annuity balances have continued to grow due  to  market
acceptance  of the products (due largely to a competitive rate  and  a
reputation for superior service), and changes in tax laws that removed
the attractiveness of competing tax-advantaged products.

       Old  Standard's  annuities  also  qualify  for  use  as  either
Individual   Retirement  Annuities,  Simplified   Employee   Pensions,
Qualified  Corporate  Pension  Plans or  Tax-Sheltered  Annuities  for
teachers and certain other nonprofit organizations' retirement  plans.
Under  these  qualified plans, the interest is tax  deferred  and  the
principal contributions, within the limits specifically established by
the  Internal Revenue Code, are tax deductible during the accumulation
period.   These annuities are subject to income tax only  upon  actual
receipt  of  proceeds, usually at retirement when an individual's  tax
rate is anticipated to be lower.

      During 1997, the Consolidated Group anticipates matching premium
flow substantially with the availability of Receivable investments, in
order   to   maximize   the  earnings  from   the   interest   spread.
Additionally,  the  premium flow and resulting asset  growth  will  be
influenced  by  the  ability  of Summit  to  make  additional  capital
contributions to Old Standard and Arizona Life.

      Flexible  and single premium annuities are offered  with  short,
intermediate and traditional surrender fee periods.  At September  30,
1996,  deferred  policy acquisition costs were approximately  6.2%  of
annuity reserves.  Since surrender charges typically do not exceed 5%,
increasing  termination  rates  may have  an  adverse  impact  on  the
insurance  subsidiary's  earnings, requiring  faster  amortization  of
these  costs. During the four months ended September 30, 1995 and  the
year  ended  September  30,  1996,  amortization  of  deferred  policy
acquisition  costs  were  $198,000  and  $85,000,  respectively.   The
calculation has been reviewed by an independent actuary.

      Annuity  lapse  rates are calculated by dividing  cash  outflows
related to benefits and payments by average annuity reserves.  For the
year   ended  September  30,  1996,  withdrawals  and  benefits   were
approximately   $6.5   million.   The  annualized   lapse   rate   was
approximately  11.7%.  Management believes a reasonable  estimate  for
future  lapse  rates  to be 10% (including 4% for  death  and  partial
withdrawal and 6% for basic surrenders and surrenders occurring in the
year the surrender charge expires).

      The  life  insurance subsidiaries of the Consolidated Group  are
required  to file statutory financial statements with state  insurance
regulatory  authorities  in  their  states  of  domicile.   Accounting
principles used to prepare these statutory financial statements
<PAGE>                        Page 32

differ  from  generally  accepted  accounting  principles  (GAAP).   A
reconciliation  of  GAAP net income to statutory net  income  for  the
years ended September 30, 1996 and 1995, respectively, are as follows:

                                                                  1996
1995

Net     Income     -     GAAP                               $1,285,135
$  86,031
Adjustments to reconcile:
     Deferred    policy    acquisition    cost             (1,097,613)
(116,136)
     State    insurance    guaranty    fund                   (28,261)
(8,333)
      Annuity    reserves    and    benefits                   244,358
16,170
     Capital    gains   and   IMR   amortization             (779,523)
(132,147)
      Allowance     for     losses                             486,125
196,024
      Federal     income     taxes                             258,888
(145)
          Other                                                (5,594)
2,110
                                                            ----------
---------

Net     Income    -    Statutory                         $     374,703
$ 43,574
                                                            ==========
========

Reinsurance

      Reinsurance is the practice whereby an insurance company  enters
into agreements (termed "treaties") with other insurance companies  in
order to assign some of its insured risk, for which a premium is paid,
while  retaining  the  remaining risk. Although  reinsurance  treaties
provide a contractual basis for shifting a portion of the insured risk
to other insurers, the primary liability for payment of claims remains
with the original insurer. Most life insurers obtain reinsurance on  a
portion of their risks in the ordinary course of business.  The amount
of  mortality  risk  that  a company is willing  to  retain  is  based
primarily on considerations of the amount of insurance it has in force
and upon its ability to sustain unusual mortality fluctuations.

      Western  United has negotiated a reinsurance agreement with  Old
Standard  whereby  75% of the risk on six different  annuity  products
will  be  reinsured through Old Standard.  It is presently anticipated
that this will result in reinsurance of up to approximately $5 million
in  premiums  per  month.  This procedure will allow Old  Standard  to
acquire  annuity premiums with credited interest rate which  are  more
favorable than those offered directly from Old Standard.  The level of
reinsurance  that  Old Standard can participate in will  be  dependent
upon the sufficiency of its statutory capital to sustain such growth.

Reserves


<PAGE>                        Page 33

     State law requires that the annuity reserve be sufficient to meet
Old Standard's future obligations under annuity contracts currently in
force.   Reserves  are recalculated each year to  reflect  amounts  of
insurance  in force, issue ages of new contract holders,  duration  of
contracts  and variations in contract terms.  Since such reserves  are
based on certain actuarial assumptions, no representation is made that
the  ultimate liability will not exceed these reserves.  Old  Standard
utilizes  the services of a consulting actuary to review  the  reserve
amount for compliance with applicable statutes.

      The  actuarially  determined reserve is  reported  in  statutory
financial   statements  as  required  by  state  insurance  regulatory
authorities.   Accounting principles used to prepare  these  statutory
financial   statements  differ  from  generally  accepted   accounting
principles  (GAAP).  Annuity reserves amounted to approximately  $62.4
million at September 30, 1996 based on GAAP financial reporting.

Securities Investments

      At  September  30,  1996  and 1995,  99.0%  and  100.0%  of  the
Consolidated  Group's securities, excluding stock investment  in  non-
consolidated affiliate, were held by its insurance subsidiaries.

      The  following table outlines the nature and carrying  value  of
securities  investments  held  by Old Standard  and  Arizona  Life  at
September 30, 1996:
<TABLE>
<CAPTION>
                                   Available    Held To    Total     Percent
                                   For Sale     Maturity
                                   Portfolio    Portfolio
                                ----------   ----------  ----------  --------
                                         (Dollars in Thousands)
<S>                             <C>           <C>         <C>        <C>
Total Amount                     $     187     $  7,750   $  7,937    100.0%
                                 =========     ========   ========    ======
% Invested In:
    Fixed Income                 $     187     $  7,750   $  7,937    100.0%
     Equities                           --           --         --      0.0%
                                 ---------     --------  --------     ------
                                 $     187     $  7,750   $  7,937    100.0%
                                 =========     ========   ========    ======

% Fixed Income:
     Taxable                     $     187     $  7,750   $  7,937    100.0%
     Non-taxable                        --           --         --      0.0%
                                 ---------     --------   --------    ------

<PAGE>                        Page 35

                                 $     187     $  7,750   $  7,937    100.0%
                                 =========     ========   ========    ======

% Taxable:
     U.S.Government              $      --     $  5,736   $  5,736     72.3%
     Corporate                         187        2,014      2,201     27.7%
                                 ---------     --------   --------    ------
                                 $     187     $  7,750   $  7,937    100.0%
                                 =========     ========   ========     =====
% Corporate:
        AAA                      $      --     $  1,012   $  1,012     46.0%
        AA                              --        1,002      1,002     45.5%
        A                              187           --        187      8.5%
                                 ---------      --------  --------    ------
                                 $     187     $  2,014   $  2,201    100.0%
                                 =========     ========   ========    ======
% Corporate:
        Mortgage-backed          $     187     $     --   $    187      8.5%
        Finance                         --        1,012      1,012     46.0%
        Industrial                      --        1,002      1,002     45.5%
                                 ---------     --------   --------    ------
                                 $     187     $  2,014   $  2,201    100.0%
                                 =========     ========   ========    ======
</TABLE>

      Investments  of the insurance subsidiaries are  subject  to  the
direction  and  control of investment committees  appointed  by  their
respective Board of Directors.  All such investments must comply  with
applicable  state  insurance  laws and  regulations.   See  "BUSINESS-
REGULATION".   Investments  primarily  include  corporate,  government
agency, and direct government obligations.

      Old Standard and Arizona Life are authorized by their respective
investment  policies  to  use financial futures  instruments  for  the
purpose  of  hedging  interest rate risk relative  to  the  securities
portfolio or potential trading situations.  In both cases, the futures
transaction  is  intended  to reduce the risk  associated  with  price
movements for a balance sheet asset.  See "MANAGEMENT'S DISCUSSION AND
ANALYSIS-Asset/Liability Management".

      In  the held to maturity portfolio, gross unrealized losses were
approximately $128,000 at September 30, 1996.

METHOD OF FINANCING

      The  Consolidated Group's continued growth is expected to depend
on its ability to market its securities and annuities to the public
<PAGE>                        Page 36

and  to invest the proceeds in higher-yielding investments.  Financing
needs  are  intended to be met primarily by the sale of its annuities,
sales  and  securitizations of Receivables, sales of Certificates  and
Preferred  Stock.  Such funds may be supplemented by  short-term  bank
financing and borrowing from affiliates.  Old Standard has established
secured   lines   of  credit  through  several  lending  institutions,
principally consisting of Brokerage Firms.  As of September 30,  1996,
there  was  approximately  $3.8 million of  short-term  collateralized
borrowings outstanding.

      The  availability of Receivables offered for investment  in  the
national  market is believed by management to be adequate to meet  the
needs of the Consolidated Group.

BROKER DEALER ACTIVITIES

      Metropolitan Investment Securities, Inc. (MIS) is  a  securities
broker/dealer,  and member of the National Association  of  Securities
Dealers,  Inc.-Regulation.   It markets  the  securities  products  of
Summit  and  of  Metropolitan, Summit's  former  parent  company.   In
addition, MIS currently markets several families of mutual funds,  and
general  securities.  MIS's sales efforts were previously  focused  in
the  states of Washington, Oregon, Idaho and Montana. MIS is  licensed
in  several  other  Western  states and has  expanded  its  sales  and
marketing  efforts  into California, Utah, Nevada and  Colorado.   MIS
sustained  a loss of approximately $137,000 during the current  fiscal
year.   See "MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND  RESULTS  OF  OPERATIONS"  &  Note 12  to  Consolidated  Financial
Statement.

PROPERTY DEVELOPMENT SERVICES

       Summit   Property  Development,  Inc.  provides   real   estate
development  services for a fee.  Currently its  principal  client  is
Metropolitan.  Such services may include, but are not limited  to  the
following: sales, marketing, market analysis, architectural  services,
design   services,  subdividing  properties,  and  coordination   with
regulatory  groups  to  obtain the approvals which  are  necessary  to
develop  a particular property.  Summit Property Development does  not
own  any  real  estate  itself.   Summit  Property  Development,  Inc.
produced operating income for the Consolidated Group during the fiscal
year ended September 30, 1996 of approximately $141,000 on revenues of
approximately $2,047,000. See "MANAGEMENT DISCUSSION AND  ANALYSIS  OF
FINANCIAL  CONDITION  AND  RESULTS  OF  OPERATIONS"  &  Note   12   to
Consolidated Financial Statement.

COMPETITION


<PAGE>                        Page 37

      Summit,  Old Standard and Arizona Life's ability to compete  for
Receivable  investments  is  currently dependent  upon  Metropolitan's
Receivable  acquisition network.  Metropolitan competes  with  various
real estate financing firms, real estate brokers, banks and individual
investors  for  the  Receivables  it  acquires.   The  largest  single
competitors are subsidiaries of much larger companies which  may  have
access   to  greater  resources  and  better  name  recognition   than
Metropolitan.   The  largest  group of individual  competitors  are  a
multitude  of  individual investors.  Management believe  its  primary
competitive  factors are the amounts offered and  paid  to  Receivable
sellers  and  the speed with which the processing and funding  of  the
transaction  can  be  completed.  Competitive  advantages  enjoyed  by
Summit, Old Standard and Arizona Life include access to Metropolitan's
Receivable  acquisition network, which allows their access to  markets
throughout  the  United  States; their ability to  purchase  long-term
Receivables; their flexibility in structuring Receivable acquisitions;
its  availability  of  funds;  and  their  in-house  capabilities  for
processing  and  funding transactions.  To the extent other  competing
Receivable investors may develop faster closing times or more flexible
investment policies, they may experience a competitive advantage.

      Summit,  Old Standard and Arizona Life compete in the  secondary
mortgage market as sellers of pools of Receivables (both direct  sales
and  sales  through securitizations).  This market is a multi  billion
dollar   industry   and  includes  many  financial  institutions   and
government participants.  Competitors generally have access to  larger
resources,  greater transaction volumes and economies  of  scale,  and
better name recognition.

      Summit's  and  MIS's  securities products face  competition  for
investors from other securities issuers, other broker/dealers and from
other  types of financial institutions, many of which are much larger,
and have greater name recognition than MIS.

      The  life  insurance and annuity business is highly competitive.
Premium   rates,  annuity  yields  and  commissions  to   agents   are
particularly   sensitive  to  competitive  forces.    Old   Standard's
management  believes that it is in an advantageous  position  in  this
regard  because  of  its  earning capability  through  investments  in
Receivables  compared to that of most other life insurance  companies.
Old Standard has also been assigned an A.M. Best Co. (Best) rating  of
"B  (good)".   Best bases its rating on a number of complex  financial
ratios, the length of time a company has been in business, the  nature
and  quality of investments in its portfolio, depth and experience  of
management and various other factors.  Best's ratings
<PAGE>                        Page 38

are  supplied primarily for the benefit of policyholders and insurance
agents.

REGULATION

      Old  Standard  and  Arizona Life are subject  to  the  Insurance
Holding  Company  Act  as  administered by the  Office  of  the  State
Insurance   Commissioner  of  the  State   of   Idaho   and   Arizona,
respectively.   Each  act  regulates  transactions  between  insurance
companies  and  their  affiliates.  It  requires  that  the  insurance
companies  provide  prior  notification to  the  respective  Insurance
Commissioners of certain transactions between an insurance company and
Summit  or  any  other  affiliate.  In certain  instances,  respective
Insurance Commissioner's approval is required.

     Old Standard and Arizona Life are subject to extensive regulation
and  supervision by the Office of the State Insurance Commissioner  of
Idaho  and  Arizona, respectively.  To a lesser extent they  are  also
subject  to  regulation  by each of the other  states  in  which  they
operate.  These  regulations are directed toward supervision  of  such
things as granting and revoking licenses to transact business on  both
the  insurance  company  and  agent levels,  approving  policy  forms,
prescribing   the   nature   and  amount  of  permitted   investments,
establishing  solvency  standards and  conducting  extensive  periodic
examinations  of  insurance  company  records.   Such  regulation   is
intended  to  protect annuity contract and policy owners, rather  than
investors in an insurance company.  Old Standard and Arizona Life  are
required to file detailed annual and quarterly financial reports  with
their respective states of domicile.

      All states in which the insurance subsidiaries operate have laws
requiring  solvent  life insurance companies  to  pay  assessments  to
protect  the  interests of policyholders of insolvent  life  insurance
companies.   Assessments  are levied on all member  insurers  in  each
state  based  on a proportionate share of premiums written  by  member
insurers  in  the  lines  of business in which the  insolvent  insurer
engaged.   A  portion of these assessments can be offset  against  the
payment  of  future premium taxes.  However, future changes  in  state
laws could decrease the amount available for offset.

      The  net  amounts expensed by Old Standard and Arizona Life  for
guaranty fund assessments and charged to operations for the year ended
September 30, 1996  and the four month period ended September 30, 1995
were  $90,000 and $25,000, respectively.  This estimate was  based  on
updated information provided by the National Organization of Life  and
Health   Insurance   Guaranty  Associations   regarding   insolvencies
occurring during 1990 through 1993.  Management does
<PAGE>                        Page 39

not  believe  that  the amount of future assessments  associated  with
known  insolvencies  after  1993 will be  material  to  its  financial
condition  or  results of operations. These estimates are  subject  to
future   revisions   based  upon  the  ultimate  resolution   of   the
insolvencies  and  resultant  losses.   Management  cannot  reasonably
estimate  the additional effects, if any, upon its future  assessments
pending the resolution of the above described insolvencies. The amount
of  guaranty  fund assessment has been recorded net of a  7%  discount
rate  applied  to  the  estimated payment term of approximately  seven
years.

       Old  Standard  and  Arizona  Life  are  subject  to  regulatory
restrictions  on  their ability to pay dividends.   Such  restrictions
affect Summit's and Old Standard's ability to receive dividends.   The
unrestricted  statutory deficit of the insurance subsidiaries  totaled
approximately $1,002,000 as of September 30, 1996.

     For statutory purposes, Old Standard's and Arizona Life's capital
and  surplus and their ratio of capital and surplus to admitted assets
were as follows as of the dates indicated:

<TABLE>
<CAPTION>
                                       As of           As of December 31,
                              September 30, 1996   1995      1994      1993
                             -------------------   ----      ----      ----
                                               (Dollars in Thousands)
       <S>                            <C>          <C>        <C>      <C>
        Old Standard:

        Capital and Surplus           $7,994       $3,007     $2,431    $2,069
        Ratio of Capital and
        Surplus to Admitted
        Assets                          10.9%         5.4%       5.4%      5.0%

        Arizona Life:

        Capital and Surplus           $1,511       $1,214         --        --
        Ratio of Capital and
        Surplus to Admitted
        Assets                          53.1%        99.2%         --        --
</TABLE>
      Although  the  States  of Idaho and Arizona  require  only  $2.0
million  and $450,000, respectively, in capital and surplus to conduct
insurance business, the insurance companies have attempted to maintain
a capital and surplus ratio of at least 5% of total
<PAGE>                        Page 40

admitted assets which management considers adequate for regulatory and
rating purposes.

      Idaho and Arizona have enacted the Risk Based Capital Model  law
which  requires  an insurance company to maintain minimum  amounts  of
capital and surplus based on complex calculations of risk factors that
encompass  the invested assets and business activities.  The insurance
subsidiaries' capital and surplus levels exceed the calculated minimum
requirements.

      MIS  is subject to extensive regulation and supervision  by  the
National Association of Securities Dealers, Inc. - Regulation, and the
Securities  and  Exchange  Commission  and  various  state  regulatory
authorities.  These regulations include licensing requirements, record
keeping    requirements,   net   capital   requirements,   supervision
requirements and sales practice standards.

                              MANAGEMENT
                                   
                   Directors and Executive Officers
                       (As of December 31, 1996)

     Name                    Age         Position

Tom Turner                    46         President/Director
Philip Sandifur               25         Vice President/Director
Greg Gordon                   43         Secretary/Treasurer/Director
Robert Potter                 69         Director

      Tom  Turner was elected President on October 31, 1995. Prior  to
serving  as  President,  he  had served as  Secretary/Treasurer  since
September  28,  1994.  He has been an employee of  Metropolitan  since
1985,  as a financial analyst. From 1983-1985, Mr. Turner was employed
by  Olsten  Temporary Services.  Prior to 1983, Mr. Turner  was  self-
employed, principally doing business in the real estate industry.

      Philip Sandifur is the son of C. Paul Sandifur Jr., who  is  the
sole  shareholder  of  National Summit Corp., the  parent  company  of
Summit  and also the controlling shareholder of Metropolitan.   Philip
graduated  in  1993  from Santa Clara University  receiving  a  BA  in
Business.   He  is not active in the day-to-day operations  of  Summit
except  to  the  extent  necessary to carry out  his  duties  as  Vice
President and Director.  Philip Sandifur is principally active as  the
President  of Summit Trading Services, Inc., a wholly-owned subsidiary
of Summit's parent company, National Summit Corp.


<PAGE>                        Page 41

      Greg Gordon was elected Secretary/Treasurer on October 31, 1995.
He  joined  Metropolitan in April of 1989 and  started  the  company's
demography  department.  From 1985 to 1989, he  was  employed  as  the
Northeastern  US  division,  Market  Analyst  for  Mortgage  Guarantee
Insurance  Corporation.   From 1984 to 1985,  he  was  employed  as  a
limited partnership underwriter with Reliance Insurance Company.

     Robert Potter was elected a Director of Summit on March 14, 1995.
He  is  an outside director, not active in the day-to-day business  of
Metropolitan or Summit.  From 1987 to present, Mr. Potter  has  served
as  President of Jobs Plus, Inc., a non-profit corporation  formed  to
diversify  and  broaden  the economic base of Kootenai  County  Idaho.
Prior  to 1987, Mr. Potter was employed for approximately 6 months  as
Chief  Operating Officer of Incomnet Inc., and prior to that he worked
for approximately 30 years with AT&T.

      The directors of Summit are elected for one-year terms at annual
shareholder  meetings.  The officers of Summit serve at the  direction
of the Board of Directors.

     Summit's officers and directors continue to hold their respective
positions   with  Metropolitan  and  do  not  anticipate  that   their
responsibilities  with  Summit will involve a  significant  amount  of
time. They will, however, devote such time to the business and affairs
of  Summit  as  may  be necessary for the proper  discharge  of  their
duties.

                      EXECUTIVE COMPENSATION

      The  officers  do  not  receive any  compensation  for  services
rendered  on  behalf of Summit, but they are entitled to reimbursement
for  any expenses incurred in the performance of such services.   Such
expenses  include  only  items  such as travel  expense  incurred  for
attendance at corporate meetings or other business.  No such  expenses
have been incurred to date. Other than Robert Potter, the directors do
not  receive  any  compensation for services  rendered  on  behalf  of
Summit.   Robert Potter, receives $500 per year and $100  per  meeting
plus travel expenses.

                         INDEMNIFICATION

     Summit's Articles of Incorporation provide for indemnification of
Summit's  directors,  officers and employees for  expenses  and  other
amounts reasonably required to be paid in connection with any civil or
criminal  proceedings brought against such persons by reason of  their
service  of  or  position with Summit unless it is  adjudged  in  such
proceedings that the person or persons are liable due to
<PAGE>                        Page 42

willful malfeasance, bad faith, gross negligence or reckless disregard
of   his  duties  in  the  conduct  of  his  office.   Such  right  of
indemnification  is  not exclusive of any other  rights  that  may  be
provided by contract of other agreement or provision of law.

      Insofar  as  indemnification for liabilities arising  under  the
Securities  Act  of  1933  (the "Act")may  be  permitted  to  Summit's
officers,  directors or controlling persons pursuant to the  foregoing
provisions,  Summit  has been informed that  in  the  opinion  of  the
Securities  and  Exchange Commission such indemnification  is  against
public policy as expressed in the Act and is therefore unenforceable.

                      PRINCIPAL SHAREHOLDERS

      The  following table sets forth information with respect to  the
beneficial owners of more than five percent of Summit's voting  common
stock as of September 30, 1996.
<TABLE>
<CAPTION>
                           SHARES OF
NAME AND ADDRESS         COMMON STOCK      % OF CLASS
<S>                        <C>              <C>
National Summit Corp.      10,000           100%
W. 929 Sprague Ave.,
Spokane, Washington
</TABLE>

            CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
                                   
Names  and  relationship of parties/persons involved in related  party
transactions.

      Summit was originally organized as a wholly-owned subsidiary  of
Metropolitan.   On  September  9, 1994, the  controlling  interest  in
Summit  was  acquired by National Summit Corp., a Delaware corporation
which  is wholly-owned by C. Paul Sandifur, Jr.  The change in control
was  made pursuant to a reorganization wherein Summit redeemed all the
common  shares held by its former parent company, Metropolitan,  which
consisted  of  100%  of  the  outstanding  common  stock  of   Summit.
Contemporaneous with this redemption, Summit issued 10,000  shares  of
common  stock  to  National Summit Corp., a Delaware Corporation,  for
$100,000.  In addition, various investors in Metropolitan's common and
preferred stock, including members of Mr. Sandifur's immediate  family
acquired 30,224 shares of Summit's Preferred Stock Series S-1 for $100
per  share in exchange for preferred and common shares of Metropolitan
with  a  value  of  approximately $3 million.   Following  this  sale,
Metropolitan has
<PAGE>                        Page 43

continued  to  provide,  for  a fee, principally  all  the  management
services to Summit.  See "BUSINESS-RECEIVABLE INVESTMENTS".

      Mr. Sandifur holds effective control of Metropolitan.  Prior  to
the  sale,  Mr.  Sandifur  held effective control  of  Summit  through
Metropolitan.  Following the sale, Mr. Sandifur continues  to  control
Summit through National Summit Corp.

      Prior  to  the sale, the officers and directors of Summit,  were
also  officers  or  directors of Metropolitan and/or  its  affiliates.
Contemporaneous with the sale, the officers and directors resigned and
new  officers  and directors were elected.  Currently, no  officer  or
director of Summit is an officer or director of Metropolitan.

Description of Related Party Transactions

     Transactions between Metropolitan, its subsidiaries and companies
within  the  Consolidated Group take place in  the  normal  course  of
business.  Such transactions include rental of office space, provision
of  administrative and data processing support, accounting  and  legal
services.    See  Note  12  to  Financial  Statements.   In  addition,
Metropolitan  and  its  subsidiaries  provide  services   to   various
companies  within  the  Consolidated Group, as  described  more  fully
hereinbelow.

     Summit, Old Standard and Arizona Life obtain substantially all of
their  Receivable  management and servicing support from  Metropolitan
through  a Management, Receivable Acquisition and Servicing Agreement.
In   1996,   the  Consolidated  Group  incurred  fees  for  Receivable
acquisitions  from Metropolitan of approximately $1,753,000  and  fees
for  servicing  by Metwest of approximately $290,000.  See  "BUSINESS-
RECEIVABLE  INVESTMENTS" & " RISK FACTORS" & Note 12  to  Consolidated
Financial Statements.  Management believes that such Agreements are on
terms  at  least as favorable as could be obtained from non-affiliated
parties.

      Old Standard has negotiated a reinsurance agreement with Western
United,   Metropolitan's  insurance  subsidiary.   It   is   presently
anticipated that approximately $5 million in premiums per  month  will
be reinsured. See "BUSINESS-Annuity Operations-Reinsurance"

      Summit  has entered into Selling Agreements with MIS to  provide
for the sale of the Certificates and Preferred Stock pursuant to which
MIS  will  be paid commissions up to a maximum of 6% of the investment
amount  in  each transaction.  During the fiscal year ended  September
30,  1996, Summit paid or accrued commissions to MIS in the amount  of
$463,477 upon the sale of $13,291,967 of certificates and
<PAGE>                        Page 44

commissions  of $31,764 upon the sale of $568,950 of preferred  stock.
MIS  also  maintains, on behalf of Summit, certain investor files  and
information  pertaining  to investments in Summit's  certificates  and
preferred stock.

      Summit  Property Development has entered into an Agreement  with
Metropolitan  to provide property development services to Metropolitan
for  a  fee.   During the year ended September 30, 1996  the  fee  was
approximately   $2.0  million.   See  "BUSINESS-PROPERTY   DEVELOPMENT
SERVICES".

       During   April  1996,  C.  Paul  Sandifur,  Jr.  President   of
Metropolitan  and  controlling shareholder  of  Metropolitan  and  the
Consolidated  Group,  sold  to  Summit nineteen  shares  of  stock  in
Consumers  Group  Holding Company (a subsidiary of  Metropolitan)  for
$1.5 million.  The purchase price was paid in cash.


Item 2.   Properties

The  principal  offices of Summit and its subsidiaries are  an  office
building located at 929 West Sprague Avenue Spokane, Washington.  Also
See  "BUSINESS  -  Introduction, at page  5  and  BUSINESS-Repossessed
Properties at page 26.

Item 3.   Legal Proceedings.

      There  are  no material legal proceedings or actions pending  or
threatened  against Summit Securities, Inc., or to which its  property
is subject.

Item 4.   Submission of Matters to a vote of Security Holders.

     None

                    Part II

Item 5.   Market for the Registrant's Common Equity and Related
          Stockholder Matters.

     (a) There is no market for the registrant's common stock

     (b) There was one Common Stockholder at September 30, 1996

     (c) See "Item 6. Selected Financial Data."

<PAGE>                        Page 46


Item 6.   Selected Financial Data

                                  SUMMIT SECURITIES, INC.
                            SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
      The  consolidated financial data shown below as of September 30, 1996  and
1995  and for the years ended September 30, 1996, 1995 and 1994 (other than  the
ratio  of  earnings  to fixed charges and preferred stock dividends)  have  been
derived from, and should be read in conjunction with, the consolidated financial
statements, related notes, and Management's Discussion and Analysis of Financial
Condition  and  Results of Operations appearing elsewhere herein. The  financial
data  shown  as  of September 30, 1994, 1993 and 1992 and for  the  years  ended
September  30, 1993 and 1992 have been derived from audited financial statements
not  included herein.  The consolidated financial statements as of and  for  the
years ended September 30, 1996, 1995, 1994 and 1993 have been audited by Coopers
&  Lybrand L.L.P.  The consolidated financial statements as of and for the  year
ended September 30, 1992 have been audited by BDO Seidman.

                              Three Months Ended                              Year Ended
September 30,
                                       December 31,
                                       (Unaudited)
                                    ------------------          ---------------------------
---------------------------------
                                    1996            1995           1996           1995
1994          1993          1992
<S>                           <C>               <C>             <C>                <C>
<C>           <C>         <C>
INCOME STATEMENT
DATA:

Revenues                  $4,207,683      $3,198,207  $ 14,536,449    $ 9,576,615    $
3,395,252   $ 2,815,624   $ 2,435,843
                           ==========        ==========   ============     ===========
===========   ===========   ===========
Income before
extraordinary item          393,421         120,483     1,244,522    $    587,559    $
264,879   $   283,107   $   611,595
Extraordinary  item  (1)            --               --            --               --
--            --        49,772
                         ----------       ---------   -----------     -----------   --
---------   ----------   -----------
Net   Income                   393,421          120,483      1,244,522         587,559
264,879       283,107       661,367
Preferred Stock
Dividends                    (103,186)         (70,996)      (333,606)       (309,061)
(2,930)          --             --
                          ----------       ---------   -----------     ----------   --
---------    ----------   -----------
Income Applicable to

<PAGE>                        Page 47

Common  Stockholders      $  290,235        $ 49,487  $    910,916    $   278,498    $
261,949   $   283,107   $   661,367
                           ==========         =========   ============     ===========
===========   ===========   ===========

Per Common Share:
Income before
extraordinary
item                      $    29.02        $  4.95   $      91.09    $     27.85    $
13.47   $     14.15   $     30.58
Extraordinary  item  (1)            --              --              --              --
--            --          2.49
                         ----------        -------     ------------    ----------   --
---------  -----------    ----------
Income applicable to
common  stockholders      $    29.02        $  4.95   $      91.09    $     27.85    $
13.47  $     14.15    $     33.07
                           ==========         =======      ============    ===========
===========  ===========   ===========
Weighted average number
of common shares
outstanding                    10,000          10,000          10,000           10,000
19,445         20,000       20,000
                           ==========         =======      ============    ===========
===========    ===========  ==========

Ratio of Earning
to  Fixed  Changes                1.45            1.18            1.40            1.25
1.16           1.24         1.53

Ratio of Earnings
to Fixed Charges
and Preferred Stock
Dividends                        1.29            1.07            1.26             1.11
1.16           1.24         1.53

BALANCE SHEET DATA:
Due from/(to)
affiliated
companies, net            $    (326)    $ (737,362)  $  1,296,290    $(1,960,104)    $
267,735   $ 1,710,743  $  (400,365)
Total   Assets            $118,649,570    $100,558,330    $117,266,680     $96,346,572
$35,101,988   $25,441,605  $17,696,628
Debt Securities
and Other
Debt  Payable            $  45,172,441   $ 39,938,628    $  46,674,841     $38,650,532
$31,212,718   $21,982,078  $14,289,648
Stockholders' Equity   $  6,101,623   $  3,977,424   $  5,358,774    $ 3,907,067     $
3,321,230   $ 3,188,024  $ 2,904,917

<PAGE>                        Page 49

<FN>
(1) Benefit from utilization of net operating loss carryforwards.
</TABLE>




<PAGE>                        Page 50


Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations

          Management's Discussion and Analysis of Financial
                 Condition and Results of Operations
         For the Three Fiscal Years Ended September 30, 1996

Introduction

      Summit's operations for the current fiscal year ended September
30, 1996 continued to benefit from the acquisition of and start-up of
several  new  operating subsidiaries acquired during 1995.   MIS  was
acquired  from Summit's former parent company in January,  1995.   At
the  same time, Summit established a property development subsidiary,
Summit  Property Development.  See "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS".   Summit acquired Old Standard  from  Summit's  former
parent  company on May 31, 1995 and acquired Arizona  Life  from  ILA
Financial Services Inc. in December 1995.  Of these transactions, the
largest  was  the  acquisition of Old Standard. As of  September  30,
1996,  Old Standard had total assets of approximately $76.5  million.
During the fiscal year ended September 30, 1996, MIS, Summit Property
Development, Old Standard and Arizona Life contributed gross revenues
of  approximately  $1.1  million,  $2.0  million,  $6.9  million  and
$69,000,  respectively,  to the Consolidated  Group.   For  the  same
period,  Summit Property Development, Old Standard and  Arizona  Life
contributed  operating income of approximately  $141,000,  $1,279,000
and  $6,000, respectively, to the Consolidated Group.  MIS  sustained
an operating loss of approximately $137,000 during the current fiscal
year.

Results of Operations

      Revenues  of  the Consolidated Group increased to approximately
$14.5  million in 1996 from $9.6 million in 1995 and $3.4 million  in
1994.   The  growth in revenues from 1995 to 1996 is attributable  to
the  continuing increase in investment earnings (interest and  earned
discounts)  on outstanding Receivables due largely to the  continuing
growth  of  Old Standard along with gains realized on the sale  of  a
portion  of  the  Receivable portfolio.  Additionally  in  1996,  the
Consolidated  Group  realized  an increase  in  fee,  commission  and
service  revenues primarily from its service orientated subsidiaries,
MIS  and  Summit Property Development.  The growth in  revenues  from
1994  to 1995 was primarily attributable to an increase in investment
earnings on outstanding Receivables due largely to the acquisition of
Old  Standard along with gains realized on the sale of a  portion  of
the  Receivable  portfolio.  Additionally in 1995,  the  Consolidated
Group realized
<PAGE>                        Page 51

approximately  $2.6 million in fee, commission and  service  revenues
from   its   newly  acquired  and  newly  formed  subsidiaries.   The
Consolidated  Group  has  increased its  investment  in  Receivables,
collateralized  by  real estate, to approximately  $80.0  million  at
September 30, 1996 from $60.1 million at September 30, 1995 and $27.3
million at September 30, 1994.  Additionally, the Consolidated  Group
continued to invest in annuities and lottery prizes ending  the  year
at  September 30, 1996 with a total outstanding investment  of  $11.8
million,  which  is a decrease from the $16.9 million  investment  at
September  30,  1995  primarily as a result of selling  approximately
$11.7 million of its portfolio during fiscal 1996.  Currently, yields
available  for lottery acquisitions have decreased due  primarily  to
increased  competition in this market.  As a result the  Consolidated
Group  anticipates its acquisition volume in 1997 will be lower  than
in fiscal 1996.

      Net income before preferred stock dividends for the fiscal year
ended  September  30, 1996 was approximately $1,245,000  compared  to
approximately  $588,000 in 1995 and $265,000 in 1994.   The  increase
from  1995  to  1996 was primarily the result of an increase  in  the
margin  between  interest  sensitive income  and  interest  sensitive
expense  caused  largely by the continued growth  in  Old  Standard's
Receivable  portfolios, increased gains on the sale  of  Receivables,
and increased fees, commissions and service income, all of which were
only  partially offset by increases in its provision  for  losses  on
real estate assets, a reduction in dividends received and an increase
in  salaries and benefits, commissions and other operating  expenses.
The  increase from 1994 to 1995 was primarily the result of increased
gains  on the sale of Receivables, an increase in the margin  between
interest  sensitive  income  and interest  sensitive  expense  caused
largely  by  the  acquisition of Old Standard,  and  increased  fees,
commissions  and  service  revenues  from  MIS  and  Summit  Property
Development,  Inc. which were only partially offset by  increases  in
salaries and benefits, commissions and other operating expenses.

      The  Consolidated Group strives to maximize its  risk  adjusted
return by investing in non-conventional real estate receivables.  Non-
conventional receivables are typically receivables not originated  by
a regulated financial institution and not underwritten to FNMA or FHA
underwriting  guidelines.   Normally,  either  the  borrower  or  the
collateral   will  not  meet  sufficient  FNMA  or  FHA  underwriting
guidelines to qualify for conventional financing and the seller  will
be  required  to provide the financing to complete the  sale.   These
"seller  financed receivables" or "seller take-back receivables"  are
the  types of non-conventional receivables normally acquired  by  the
Consolidated Group.  Because borrowers in this market generally  have
blemished credit records, the Consolidated Group's underwriting
<PAGE>                        Page 52

practices focus more strongly on the collateral value as the ultimate
source  for  repayment.  In conjunction with its investment  in  non-
conventional   receivables,  while  higher  delinquency   rates   are
expected,  the  Consolidated Group believes this  risk  is  generally
offset  by  the value of the underlying collateral and  the  superior
yields over normal conventional financing.

      Since  the date of its incorporation through approximately  the
end  of  calendar  year 1993 and again in 1995 and 1996,  Summit  has
generally  benefited from a declining interest rate environment  with
lower  money  costs and relatively consistent yields on  Receivables.
In   addition,  a  declining  interest  rate  environment  positively
impacted  earnings  by  increasing the  value  of  the  portfolio  of
predominantly fixed rate Receivables.  This situation was evident  in
1996,  1995  and  1994  as  Summit  was  able  to  realize  gains  of
approximately $977,000, $513,000 and $172,000, respectively, from the
sale  of  Receivables.  Higher than anticipated levels of prepayments
in  the  Receivable portfolio were experienced during the years  1992
through  1996, allowing Summit to recognize unamortized discounts  on
Receivables  at an accelerated rate.  During 1994 and  continuing  in
1995  and 1996, Metropolitan, Summit's former parent and the  primary
supplier  of  Receivables,  began  charging  the  Consolidated  Group
underwriting  fees  associated  with  Receivable  acquisitions.   The
charging  of  the underwriting fee results in a somewhat lower  yield
over the life of the newly acquired Receivables.  However, management
believes  the yield to be favorable in comparison to other investment
opportunities.  See "BUSINESS-Introduction".

      Although  the national economy has experienced relatively  slow
growth  over the past three years, the Consolidated Group's financial
results  were not adversely impacted in any material way because  of:
(1)  the  wide  geographic  dispersion of its  Receivables;  (2)  the
relatively  small average size the each Receivable; (3)  the  primary
concentration of investments in residential Receivables where  market
values have been more stable than in commercial properties; and (4) a
continuing  strong  demand  for  tax-advantaged  products,  such   as
annuities.

       Maintaining   efficient  collection  efforts  and   minimizing
delinquencies  in the Consolidated Group's Receivable  portfolio  are
ongoing  management  goals.   During  1996,  the  Consolidated  Group
realized  a  slight loss on the sale of repossessed  real  estate  of
approximately $40,000 as compared to a gain of $6,300 in 1995  and  a
gain of $12,300 in 1994.  In recognition of the increased size of the
Consolidated   Group's   Receivable  and  real   estate   portfolios,
principally  associated  with  the  purchase  of  Old  Standard,  the
Consolidated Group has increased its provision for losses  on  assets
collateralized by real estate. Provisions for losses were
<PAGE>                        Page 53

approximately  $490,000, $455,000, and $155,000 for 1996,  1995,  and
1994,  respectively.  At September 30, 1996, the  Consolidated  Group
had  an  allowance for losses on real estate assets of  approximately
$974,000 compared to $765,000, and $251,000 at September 30, 1995 and
1994, respectively.  The increase in 1995 was in part attributable to
the  acquisition  of  Old Standard, while the increase  in  1996  was
primarily due to increases in the various Receivable portfolios.   At
September  30,  1996,  1995  and  1994,  the  allowance  for   losses
represented approximately 1.2%, 1.2% and 0.9%, respectively,  of  the
face value of Receivables collateralized by real estate.

     Interest Sensitive Income and Expense

      Management  continually monitors the interest sensitive  income
and expense of the Consolidated Group.  Interest sensitive expense is
predominantly related to annuity benefits and the interest  costs  of
Certificates, while interest sensitive income includes  interest  and
earned  discounts  on  Receivables, dividends  and  other  investment
income.

     The Consolidated Group is in a "liability sensitive" position in
that  its  interest  sensitive liabilities  reprice  or  mature  more
quickly  than do its interest sensitive assets.  Consequently,  in  a
rising  interest  rate  environment, the  net  return  from  interest
sensitive  assets and liabilities will tend to decrease, thus  rising
interest  rates will have a negative impact on results of operations.
Conversely,  in a falling interest rate environment, the  net  return
from  interest sensitive assets and liabilities will tend to improve,
thus falling interest rates will have a positive impact on results of
operations. As with the impact on operations from changes in interest
rates,  the  Company's  NPV  (the Net  Present  Value)  of  financial
liabilities  is  subject  to fluctuations  in  interest  rates.   The
Company  continually monitors the sensitivity of net interest  income
and NPV to changes in interest rates.



<PAGE>                        Page 54

      The  following table presents, as of September 30, 1996, the  Consolidated
Group's estimate of the change in its NPV of financial assets and liabilities if
interest  rate  levels  generally were to increase or decrease  by  1%  and  2%,
respectively.   These calculations, which are highly subjective  and  technical,
may differ from actual results.  See "Asset/ Liability Management".
<TABLE>
<CAPTION>

                                                      Interest Rate Change
                             Carrying  Fair       Decrease   Decrease   Increase Increase
                             Amounts   Value         1%         2%         1%       2%
                                                (Dollars in Thousands)
<S>                          <C>       <C>        <C>        <C>        <C>      <C>
Financial Assets:                                                                
Cash and cash equivalents       $4,461     $4,461    $4,461     $4,461    $4,461    $4,461
Investments:                                                                              
 affiliated companies            4,522      4,522     4,522      4,522     4,522     4,522
 Available-for-sale                269        269       279        290       258       249
 Held-to-maturity                7,750      7,622     7,780      7,938     7,477     7,331
Real estate contracts                                                                     
 and mortgage notes             78,932     79,427    82,287     85,337    76,740    74,214
Other receivable investments    11,788     12,404    12,937     13,504    11,903    11,431
                                ------     ------    ------     ------    ------    ------
                              $107,722   $108,705  $112,266   $116,052  $105,361  $102,208
                              ========   ========  ========   ========  ========  ========
                                                                                          
Financial Liabilities:                                                                    
Annuity reserves               $62,440    $62,440   $64,412    $66,629   $60,273   $58,342
Investment certificates         42,149     42,545    43,655     44,731    41,610    40,638
Debt payable                     3,840      3,840     3,840      3,840     3,840     3,840
                                ------     ------    ------     ------    ------    ------
                              $108,429   $108,825  $111,907   $115,200  $105,723  $102,820
                              ========   ========  ========   ========  ========  ========




<PAGE>                        Page 55


       The   excess  of  interest  sensitive  income  over  interest   sensitive
expense   was  approximately  $2,172,000  in  1996,  $1,075,000  in  1995,   and
$543,000   in  1994.   The  increase  from  1995  to  1996  of  $1,097,000   was
attributable   to   the   following:   (1)   increased   investment    in    the
Receivable   portfolio   largely   due  to   the   continued   growth   of   Old
Standard;  and  (2)  a  lower  cost  of  funds,  influenced  in  part   by   the
acquisition   of   the   insurance  subsidiaries,  Old  Standard   and   Arizona
Life.    The   increase   from   1994   to  1995   was   attributable   to   the
following:    (1)    increased   investment   in   the   Receivable    portfolio
largely  due  to  the  acquisition  of  Old  Standard;  (2)  a  lower  cost   of
funds,   influenced   in  part  by  the  acquisition  of  Old   Standard;   and,
(3)   additional   dividend  income  from  preferred   and   common   stock   of
Metropolitan    held   by   Summit.    See   Note   12   to   the   Consolidated
Financial Statements.

Fees, Commissions, Service and Other Income

       Other   income   grew   to   approximately  $2,850,000   in   1996   from
$2,580,000   in  1995  and  $60,700  in  1994.   Revenues  in  1996,   consisted
primarily    of    commissions    earned    by    the    Consolidated    Group's
broker/dealer    subsidiary,    MIS,   of    approximately    $595,500    (after
elimination   of   commissions   received   from   Summit)   and   approximately
$2.0   million   of   service   fees  earned   by   its   property   development
subsidiary.    The   increase  in  1996  of  approximately   $270,000   resulted
from   an   increase   in   property  development   fees   of   $800,000   being
offset   by   a   decrease  in  commissions  earned  by  MIS  of   approximately
$530,000.

Other Expenses

       Operating  expenses  increased  to  approximately  $3,988,000   in   1996
as   compared   to   $2,901,000  in  1995  and  $231,000  in  1994.   The   1996
increase   in   operating   expenses  was  principally   the   result   of   the
continued    growth   of   the   Consolidated   Group,   in    particular    Old
Standard   and   Summit   Property  Development.   In  1996,   Summit   Property
Development's   increase   in  service  fees  were   offset   by   approximately
$763,000   in   increased  expenses,  while  Old  Standard's   growth   resulted
in   expense   increases  of  approximately  $185,000  and  MIS  also   incurred
increased   expenses   of  approximately  $111,000.   The   1995   increase   in
operating   expense   was  principally  the  result  of  the   acquisition   and
establishment     of    new    subsidiaries,    including     the     insurance,
broker/dealer    and    the    property    development    subsidiaries.      See
"BUSINESS-Recent Developments-Subsidiary Acquisitions".

Provision for Losses on Real Estate Assets


<PAGE>                        Page 56

       The   provision   for   losses  on  Receivables  and   repossessed   real
estate  has  increased  as  the  size  of  the  portfolio  of  Receivables   and
repossessed   real   estate   has   grown  to  provide   for   what   Management
believes    are   adequate   allowances   for   anticipated   losses,    however
there   can   be   no   assurance   that   actual   losses   will   not   exceed
management's    expectations.     The    following    table    summarizes    the
Consolidated    Group's    allowance   for    losses    on    Receivables    and
repossessed real estate:


</TABLE>
<TABLE>
<CAPTION>
                               1996       1995       1994
        <S>                    <C>        <C>        <C>
         Beginning Balance  $765,130    $250,572    $ 96,654
         Increase due to:
         Acquisition of
         life insurance
         affiliate                       310,957
         Provision           212,600     103,950      103,000

         Charge-Offs         (18,896)    (34,276)     (49,921)
         Recoveries           15,653     133,927      100,839
                             --------   --------      --------
         Ending Balance     $974,487    $765,130     $250,572
                            ========     =======      =======
<FN>
       These   allowances   are   in   addition   to   unamortized   acquisition
discounts   of   approximately  $4.7  million  at  September  30,   1996,   $2.6
million at September 30, 1995 and $1.3 million at September 30, 1994.
</TABLE>

Gain/Loss on Other Real Estate Owned

       During   1996,  the  Consolidated  Group  experienced  a  loss   on   the
sale   of  real  estate  of  approximately  $39,600.   At  the  end  of   fiscal
1996,   the   Consolidated   Group   had  approximately   $1,191,000   in   real
estate held for sale, just over 1% of total assets.

Effect of Inflation

       During  the  three  year  period  ended  September  30,  1996,  inflation
has   had   a   generally   positive  impact   on   the   Consolidated   Group's
operations.    This   impact   has  primarily  been   indirect   in   that   the
level   of   inflation  tends  to  be  reflected  in  the   current   level   of
interest   rates   which   impact   interest   returns   and   costs   on    the
Consolidated   Group's   assets   and   liabilities.    See   "BUSINESS-Interest
Sensitive   Income  and  Expense".   However,  both  interest  rate  levels   in
general
<PAGE>                        Page 57

and  the  cost  of  the  Consolidated  Group's  funds  and  the  return  on  its
investments  are  influenced  by  additional  factors  such  as  the  level   of
economic    activity    and   competitive   or   strategic    product    pricing
issues.    The   net  effect  of  the  combined  factors  on  the  earnings   of
the   Consolidated  Group  has  been  a  slight  improvement  over   the   three
year   period   in  the  positive  spread  between  the  rate   of   return   on
interest   earning  assets  less  the  cost  of  interest  paying   liabilities.
Inflation   has   not  had  a  material  effect  on  the  Consolidated   Group's
operating   expenses.    Increases   in   operating   expenses   have   resulted
principally    from    increased   product    volumes    or    other    business
considerations   including   the  acquisition  of   additional   companies   and
the start-up of new businesses.

       Revenues   from   real   estate  sold   are   influenced   in   part   by
inflation,   as,   historically,  real  estate  values  have   fluctuated   with
the   rate   of   inflation.   However,  the  effect  of   inflation   in   this
regard   has   not   had   a   material  effect  on  the   operations   of   the
Consolidated   Group  nor  is  it  expected  to  have  a  material   effect   in
the near future.

Asset/Liability Management

       As   most  of  the  Consolidated  Group's  assets  and  liabilities   are
financial   in   nature,  the  Consolidated  Group  is   subject   to   interest
rate    risk.    In   fiscal   1997,   more   of   the   Consolidated    Group's
financial    liabilities   (primarily   annuities   and    certificates)    will
reprice   or   mature   more  quickly  than  its  financial  assets   (primarily
Receivables   and   fixed   income  investments).  In  a   decreasing   interest
rate   environment,   this   factor  will   tend   to   increase   earnings   as
liabilities   will   generally  be  repriced  at   lower   rates   of   interest
while   financial   assets   maintain  their   existing   rates   of   interest.
This   effect   is  mitigated  to  the  extent  that  Receivables  are   reduced
when    debtors   increase   their   level   of   early   repayments   to    the
Consolidated Group in a decreasing rate environment.

       The  Consolidated  Group  may  use  financial  futures  instruments   for
the   purpose  of  hedging  interest  rate  risk  relative  to  investments   in
the   securities   portfolio   or   potential  trading   situations.   In   both
cases,   the   futures   transaction   is   intended   to   reduce   the    risk
associated    with    price    movements   for   a    balance    sheet    asset.
Additionally,   the  Consolidated  Group  may  sell  securities   "short"   (the
sale   of   securities   which  are  not  currently   in   the   portfolio   and
therefore   must   be   purchased  to  close  out   the   sale   agreement)   as
another   means  of  economically  hedging  interest  rate  risk,  or   take   a
trading    position   in   an   attempt   to   benefit   from   an   anticipated
movement   in   the  financial  markets.   The   Consolidated  Group   had   not
employed
<PAGE>                        Page 58

any   such  strategies  prior  to  or  through  September  30,  1996.  Also  See
"BUSINESS-Securities Investments".

       During   fiscal   1997,   approximately   $13.8   million   of   interest
sensitive   assets   (cash,  Receivables  and  fixed  income  investments)   are
expected    to    reprice   or   mature.    Interest   sensitive    liabilities,
including   annuity   reserves   of   approximately   $62.4   million    reprice
during   fiscal   1997,  and  approximately  $10.9  million   of    Certificates
and   other   debt   will   mature   during  fiscal   1997.    These   estimates
result   in   repricing  of  interest  sensitive  liabilities   in   excess   of
interest   sensitive  assets  of  approximately  $59.5  million,  or   a   ratio
of   interest   sensitive   liabilities  to   interest   sensitive   assets   of
approximately 530%.  See " RISK FACTORS."

      The  Consolidated  Group  is  able  to  manage  this  liability  to  asset
mismatch  of  approximately  5.3:1  by  the  fact  that  approximately  85%   of
the   interest   sensitive   liabilities  are  annuity   contracts   which   are
subject   to   surrender  charges.   These  contracts  have   maturities   which
extend  for  as  long  as  nine  years  with  surrender  charges  of  decreasing
amounts   during  their  term.   At  the  option  of  the  Consolidated   Group,
these   contracts   are   subject   to  annual   repricing.    In   periods   of
declining  interest  rates,  this  feature  is  beneficial  as  it  allows   the
Consolidated   Group   to  reprice  its  liabilities  at  lower   market   rates
of    interest.     In    periods   of   increasing   interest    rates,    such
liabilities   were   protected  by  surrender   charges.    Depending   on   the
remaining   surrender  charges,  the  Consolidated  Group  has  the  option   to
extend   any   interest  rate  increase  over  a  two  to  three  year   period,
thereby   making   it  not  generally  economical  for  an  annuitant   to   pay
the  surrender  charge  in  order  to  receive  payment  in  lieu  of  accepting
a   rate   of   interest   that   is  lower  than  current   market   rates   of
interest.    As   a   result,   the  Consolidated   Group   may   respond   more
slowly    to    increases    in   market   interest    rate    levels    thereby
diminishing   the   impact   of   the   current   mismatch   in   the   interest
sensitivity    ratio.    Additionally,   through   Receivable   securitizations,
the  Company  has  increased  its  ability  to  raise  necessary  liquidity   to
manage   the   liability  to  asset  mismatch.   If  necessary,   the   proceeds
from the securitization could be used to payoff maturing liabilities.

New Accounting Rules

       In  May  1993,  Statement  of  Financial  Accounting  Standards  No.  114
(SFAS  No.  114)  "Accounting  by  Creditors  for  Impairment  of  a  Loan"  was
issued.    SFAS   No.   114   requires   that   certain   impaired   loans    be
measured   based   on   the  present  value  of  expected  future   cash   flows
discounted  at  the  loans'  effective  interest  rate  or  the  fair  value  of
the   collateral,  net  of  selling  costs.  The  Consolidated   Group   adopted
this   new  standard  on  October  1,  1995.  The  adoption  of  SFAS  No.   114
did not have a material effect on the financial statements.

<PAGE>                        Page 59


       In   June   1996,  Statement  of  Financial  Accounting   Standards   No.
125   (SFAS   125),  "Accounting  for  Transfers  and  Servicing  of   Financial
Assets   and   Extinguishments   of   Liabilities"   was   issued.    SFAS   125
provides   accounting   and   reporting  standards   based   on   a   consistent
application   of   a   financial   components   approach   that    focuses    on
control.    Under   this  approach,  after  a  transfer  of  financial   assets,
an   entity   recognizes  the  financial  and  servicing  assets   it   controls
and   the   liabilities   it   has  incurred,  derecognizes   financial   assets
when   control   has   been  surrendered  and  derecognizes   liabilities   when
extinguished.     This    statement   provides    consistent    standards    for
distinguishing   transfers   of   financial   assets   that   are   sales   from
transfers   that   are   secured  borrowings.   SFAS  125   is   effective   for
transfers   and   servicing   of  financial  assets   and   extinguishments   of
liabilities   occurring  after  December  31,  1996.   The  Company   does   not
expect  that  the  application  of  the provisions  of  SFAS  125  will  have  a
material   effect   on   the   Company's   financial   condition,   results   of
operations or cash flows.

Liquidity and Capital Resources

       As   a   financial   institution,  the  Consolidated  Group's   liquidity
is   largely   linked   to   its   ability  to   renew,   maintain   or   obtain
additional   sources   of   cash.  The  Consolidated  Group   has   successfully
maintained   liquidity,   as  necessary,  during  the   past   four   years   to
allow   it   to   continue  to  invest  funds  generated   by   operations   and
financing    activities.    The   Consolidated   Group's   increased   liquidity
position   has   been   enhanced  due  to  its   ability   to   securitize   its
Receivables collateralized by real estate.

        The    Consolidated   Group   utilized   cash   from    operations    of
approximately  $.6  million  in  1996,  and  generated  $4.0  million  in   1995
and  $2.3  million  in  1994.   Cash  used by  the  Consolidated  Group  in  its
investing   activities   totaled   approximately   $15.2   million   in    1996,
$13.7  million  in  1995  and  $6.3 million  in  1994.   Cash  provided  by  the
Consolidated   Group's   financing  activities   totaled   approximately   $17.2
million   in   1996,   $9.1  million  in  1995  and  $4.1   million   in   1994.
These   cash   flows  have  resulted  in  year  end  cash  and  cash  equivalent
balances  of  approximately  $4.5  million  in  1996,  $3.0  million  in   1995,
and $3.6 million in 1994.

        During    1996,   approximately   $17.2   million   was   provided    by
financing   activities,  approximately  $.6  million  was  used   in   operating
activities,   and   $15.2  million  was  used  in  investing  activities   which
resulted   in   a   $1.5   million  increase  in   available   cash   and   cash
equivalents.  The cash from financing activities of $17.2 million
<PAGE>                        Page 60

resulted    primarily   from:   (1)   issuance   of   Certificates,    net    of
repayments   and   related   debt   issue   costs,   of   $4.1   million;    (2)
issuance   of   insurance  annuities,  net  of  surrenders,   of   approximately
$9.2   million;   (3)   issuance  of  preferred  stock  of   approximately   $.5
million;    (4)   borrowings   from   banks   and   others,    net    of    debt
repayments,   of   $3.7   million;   less   (5)   dividend   payments   of   $.3
million.    Cash   used  in  operating  activities  of  $.6   million   resulted
primarily   from   net   income   of   $1.2  million,   increases   in   annuity
reserves   of   $3.7  million  being  offset  by  changes  in   various   assets
and    liabilities   of   approximately   $5.5   million.     Cash    used    in
investing   activities   of   $15.2  million  primarily   included   acquisition
of   real   estate  Receivables  and  other  Receivable  investments,   net   of
payments   and   sales,  of  $13.4  million,  $1.5  million  invested   in   the
common   stock   of   an   affiliated  company  and   $760,000   used   in   the
purchase of Arizona Life.

       During   1995,   the   cash   provided   by   operating   activities   of
approximately   $4.0   million  plus  cash  provided  by  financing   activities
of   $9.1   million   was   used   entirely  to  support   the   net   investing
activities   of  $13.7  million.   Cash  from  operating  activities   of   $4.0
million   resulted  primarily  from  net  income  of  $600,000,   increases   in
annuity   reserves   of  $1.0  million,  increases  in  compound   and   accrued
interest   on   Certificates  of  $1.7  million  plus   other   adjustments   of
$.7   million.    Cash   used   in  investing  activities   of   $13.7   million
primarily   included   acquisition  of  real  estate   Receivables   and   other
Receivable   investments,  net  of  payments  and  sales,  of   $16.1   million,
offset  by  $1.0  million  from  the  sale  of  investment  securities  and  the
$1.4    million   of   cash   received   upon   the   acquisition   of   various
subsidiaries.     Cash    from   financing   activities    of    $9.1    million
resulted    primarily   from:   (1)   issuance   of   certificates,    net    of
repayments   and   related   debt   issue   costs,   of   $5.3   million;    (2)
issuance   of   insurance  annuities,  net  of  surrenders,   of   approximately
$4.0   million;   (3)  issuance  of  preferred  stock  of  $.4   million;   less
(4)   debt   repayments   to  banks  and  others  of  $.2   million;   and   (5)
dividend payments of $.3 million.

       During   1994,  the  cash  provided  by  operating  activities  of   $2.3
million,   plus   cash  provided  by  financing  activities  of  $4.1   million,
was   used   entirely   to  support  the  net  investing  activities   of   $6.3
million.    Cash   from   operating  activities   of   $2.3   million   resulted
primarily   from  net  income  of  $.3  million,  increases  in   compound   and
accrued   interest   on  certificates  of  $1.2  million   and   other   accrual
adjustments   of   $.6   million.   Cash  used  in   investing   activities   of
$6.3   million   primarily   included  acquisition  of   Receivables,   net   of
payments  and  sales,  of  $8.0  million  being  offset  by  the  collection  of
advances   from   related  parties  of  $1.7  million.   Cash   from   financing
activities   of   $4.1  million  resulted  primarily  from:  (1)   issuance   of
certificates,  net  of  repayment  and  related  debt  issue  costs,   of   $7.5
million; (2) issuance of common and preferred stock of $.2 million;
<PAGE>                        Page 61

less   (3)   redemption   of   common   stock,   owned   by   the   Consolidated
Group's former parent, of $3.6 million.

        During    1997,   anticipated   principal,   interest    and    dividend
payments   on   outstanding  debentures,  other  debt  payments  and   preferred
stock   distributions   are   expected  to  be  approximately   $12.0   million.
During   1996,   the  principal  portion  of  the  payments  received   on   the
Consolidated   Group's   Receivables   and   proceeds   from   sales   of   real
estate    and   Receivables   was   $34.1   million.    A   decrease   in    the
prepayment   rate   on   these  Receivables  or   the   ability   to   sell   or
securitize    Receivables    would    reduce    future    cash    flows     from
Receivables    and    might   adversely   affect   the   Consolidated    Group's
ability to meet its principal, interest and dividend payments.

       The   Consolidated   Group   expects   to   maintain   high   levels   of
liquidity   in   the    foreseeable   future  by   continuing   its   securities
offerings,    annuity    sales   and   the   sale    and    securitization    of
Receivables.   At   September  30,  1996,  cash   or   cash   equivalents   were
$4.5   million,   or   3.8%   of   assets.   Including   securities   that   are
available  for  sale  total  liquidity  was  $4.7  million,  $3.0  million   and
$3.6   million   as  of  September  30,  1996,  1995  and  1994,   respectively,
or 3.8%, 3.1% and 10.3% of total assets, respectively.

         Access     to     new    "capital    markets"    through     Receivable
securitizations   has   allowed  the  Company   to   both   increase   liquidity
and    accelerate    earnings    through   the    gains    recorded    on    the
securitizations.     The   increased   ability   to   raise    liquidity    will
enable   the   Company  to  accept  certain  asset/liability  mismatches   which
have   historically  been  beneficial  to  the  Company   when  they  have  been
able  to  finance  higher  earning  longer  term  assets  with  lower  cost   of
funds associated with shorter term liabilities.

       For   statutory  purposes,  Old  Standard  performs  cash  flow   testing
under   several  different  rate  scenarios  as  required  by   the   State   of
Idaho.    The   results   of   these  tests  are   filed   annually   with   the
Insurance  Commissioner  of  the  State  of  Idaho.   At  the  end  of  calendar
year   1995,   the   results   of   this   cash   flow   testing   process   was
satisfactory.

       At   September  30,  1996,  the  Company  had  no  material   commitments
for   any   capital  expenditures  outside  of  commitments   related   to   its
normal    investing   activities.    Additionally,   the    Company    had    no
knowledge  of  any  environmental  liabilities  associated  with  any   of   its
real estate asset investments.

       Management  believes  that  cash  flow  from  operating  activities   and
financing activities, liquidity provided from current investments and
<PAGE>                        Page 62

the    Consolidated    Group's   ability   to   securitize    its    Receivables
collateralized   by  real  estate  will  be  sufficient  for  the   Consolidated
Group  to  conduct  its  business  and  meet  its  anticipated  obligations   as
they   mature  during  fiscal  1997.   Summit  has  not  defaulted  on  any   of
its obligations since its founding in 1990.

Item 8.     Financial Statements and Supplementary Data

             INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                                  
           YEARS ENDED SEPTEMBER 30, 1996, 1995, AND 1994

                                                              Page
Report of Independent
Accountants..................................................

Consolidated Balance Sheets..................................

Consolidated Statements of Income............................

Consolidated Statements of Stockholders' Equity..............

Consolidated Statements of Cash Flows........................

Notes to Consolidated Financial Statements...................


     REPORT OF INDEPENDENT ACCOUNTANTS



     The Directors and Stockholders
     Summit Securities, Inc.


     We have audited the accompanying consolidated balance sheets of Summit
     Securities, Inc. and subsidiaries as of September 30, 1996 and 1995,
     and the related consolidated statements of income, stockholders'
     equity and cash flows for each of the three years in the period ended
     September 30, 1996. These financial statements are the responsibility
     of the Company's management. Our responsibility is to express an
     opinion on these financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
     standards. Those standards require that we plan and perform the audit
     to obtain reasonable assurance about whether the financial statements
     are free of material misstatement. An audit includes examining, on a
     test basis, evidence supporting the amounts and disclosures in the
     financial statements. An audit also includes assessing the accounting
     principles used and significant estimates made by management, as well
     as evaluating the overall financial statement presentation. We believe
     that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present
     fairly, in all material respects, the consolidated financial position
     of Summit Securities, Inc. and subsidiaries as of September 30, 1996
     and 1995, and the consolidated results of their operations and their
     cash flows for each of the three years in the period ended September
     30, 1996 in conformity with generally accepted accounting principles.

     As discussed in Note 1, the Company changed its method of accounting
     for impaired loans in fiscal 1996.








                                  /s/ COOPERS & LYBRAND L.L.P.             


     Spokane, Washington
     December 6, 1996







                                       F-1
     <PAGE>
     SUMMIT SECURITIES, INC. AND SUBSIDIARIES
     CONSOLIDATED BALANCE SHEETS
     September 30, 1996 and 1995


                                                   1996           1995
                                               ------------   ------------
                      ASSETS

     Cash and cash equivalents                 $  4,461,315   $  2,979,362
     Investments:
       Investments in affiliated companies        4,522,425      3,022,425
       Available-for-sale securities, at 
         market                                     269,305
       Held-to-maturity securities, at 
         amortized cost                           7,750,078      8,269,541
       Accrued interest on investments               34,244         46,209
                                               ------------   ------------
           Total cash and investments            17,037,367     14,317,537

     Real estate contracts and mortgage 
       notes receivable, net, including real
       estate contracts and mortgage notes 
       receivable held for sale of approxi-
       mately $10,408,000 in 1996                80,008,753     60,117,219
     Other receivable investments                11,788,130     16,895,902
     Real estate held for sale                    1,191,495        836,291
     Deferred costs, net                          4,862,046      3,582,202
     Other assets, net, including receivables
       from affilites                             2,378,889        597,421
                                               ------------   ------------
           Total assets                        $117,266,680   $ 96,346,572
                                               ============   ============






















                                       F-2
     <PAGE>
     SUMMIT SECURITIES, INC. AND SUBSIDIARIES
     CONSOLIDATED BALANCE SHEETS, CONTINUED
     September 30, 1996 and 1995


                                                   1996           1995
                                               ------------   ------------
       LIABILITIES AND STOCKHOLDERS' EQUITY

     Liabilities:
       Annuity reserves                        $ 62,439,855   $ 49,559,589
       Investment certificates and accrued 
         interest                                42,823,871     38,545,896
       Debt payable                               3,850,970        104,636
       Accounts payable and accrued expenses, 
         including payables to affiliates         1,367,131      2,938,182
       Deferred income taxes                      1,426,079      1,291,202
                                               ------------   ------------
           Total liabilities                    111,907,906     92,439,505
                                               ------------   ------------

     Commitments and contingencies (Notes 1 
       and 13)

     Stockholders' equity:
       Preferred stock, $10 par (liquidation 
         preference $4,131,170 and $3,562,220)      413,117        356,222
       Common stock, $10 par                        100,000        100,000
       Additional paid-in capital                 2,269,137      1,786,991
       Retained earnings                          2,586,654      1,675,738
       Net unrealized loss on investments, 
         net of income taxes of $5,221
         and $6,122                                 (10,134)       (11,884)
                                               ------------   ------------
           Total stockholders' equity             5,358,774      3,907,067
                                               ------------   ------------
           Total liabilities and stockholders' 
             equity                            $117,266,680   $ 96,346,572
                                               ============   ============


     The accompanying notes are an integral part of the consolidated
       financial statements.












                                       F-3
     <PAGE>
     SUMMIT SECURITIES, INC. AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF INCOME
     for the years ended September 30, 1996, 1995 and 1994

     <TABLE>
     <CAPTION>

                                                      1996          1995          1994
                                                  -----------   -----------   -----------
      <S>                                         <C>           <C>           <C>
      Revenues:
        Annuity fees and charges                  $    45,348   $    14,179
        Interest on receivables                     6,018,615     3,901,113   $ 2,422,484
        Earned discount on receivables              2,598,306       777,659       373,003
        Other investment interest                     753,163       410,568       275,180
        Dividends                                     200,256       256,991
        Real estate sales                           1,093,000     1,123,500        88,000
        Fees, commissions, service and other 
          income                                    2,849,737     2,580,105        60,677
        Realized net gains on sales of 
          investments                                     583                       4,252
        Realized net gains on sales of real 
          estate contracts and mortgage notes 
          and other receivable investments            977,441       512,500       171,756
                                                  -----------   -----------   -----------
            Total revenues                         14,536,449     9,576,615     3,395,352

      Expenses:
        Annuity benefits                            3,702,324     1,034,082
        Interest expense                            3,741,095     3,251,334     2,527,945
        Cost of real estate sold                    1,132,552     1,117,233        75,656
        Provision for losses on real estate 
          assets                                      490,082       445,381       155,042
        Salaries and employee benefits              1,636,773       907,690
        Commissions to agents                       1,673,279     1,395,994
        Other operating and underwriting 
          expenses                                  1,775,484       738,380       231,423
        Less amount capitalized as deferred 
          costs, net of amortization               (1,097,613)     (140,745)
                                                  -----------   -----------   -----------
            Total expenses                         13,053,976     8,749,349     2,990,066
                                                  -----------   -----------   -----------
      Income before income taxes                    1,482,473       827,266       405,286
      Income tax provision                           (237,951)     (239,707)     (140,407)
                                                  -----------   -----------   -----------
      Net income                                    1,244,522       587,559       264,879
      Preferred stock dividends                      (333,606)     (309,061)       (2,930)
                                                  -----------   -----------   -----------
      Income applicable to common stockholder     $   910,916   $   278,498   $   261,949
                                                  ===========   ===========   ===========
      Income per share applicable to common 
        stockholder                               $     91.09   $     27.85   $     13.47
                                                  ===========   ===========   ===========
      Weighted average number of shares of 
        common stock outstanding                       10,000        10,000        19,445
                                                  ===========   ===========   ===========
      </TABLE>


      The accompanying notes are an integral part of the consolidated
       financial statements.

                                       F-4
     <PAGE>
     SUMMIT SECURITIES, INC. AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
     for the years ended September 30, 1996, 1995 and 1994

     <TABLE>
     <CAPTION>
                                                                                      Net
                                                                                      Unrealized
                                                                        Additional    Gains
                                            Preferred     Common        Paid-In       (Losses) on   Retained
                                            Stock         Stock         Capital       Investments   Earnings      Total
                                            -----------   -----------   -----------   -----------   -----------   -----------
      <S>                                   <C>           <C>           <C>           <C>           <C>           <C>
      Balance, September 30, 1993                             200,000   $ 1,800,000                 $ 1,188,024   $ 3,188,024
      Net income                                                                                        264,879       264,879
      Cash dividends on preferred stock 
        (variable rate)                                                                                  (2,930)       (2,930)
      Common stock redeemed and retired 
        (20,000 shares)                                      (200,000)   (3,400,000)                               (3,600,000)
      Sale of common stock (10,000 shares)                    100,000                                                 100,000
      Sale of variable rate preferred 
        stock, net of offering costs 
        (1,495 shares)                      $    14,952                     127,008                                   141,960
      Issuance of variable rate preferred 
        stock (30,224 shares)                   302,242                   2,720,183                                 3,022,425
      Income tax benefit associated with
        disaffiliation                                                      206,872                                   206,872
                                            -----------   -----------   -----------   -----------   -----------   -----------
      Balance, September 30, 1994               317,194       100,000     1,454,063                   1,449,973     3,321,230
      Net income                                                                                        587,559       587,559
      Cash dividends on preferred stock 
        (variable rate)                                                                                (309,061)     (309,061)
      Sale of variable rate preferred 
        stock, net of offering costs
        (3,903 shares)                           39,028                     332,928                                   371,956
      Net change in unrealized (losses) 
        on investment securities, net 
        of income taxes of $6,122                                                     $   (11,884)                    (11,884)
      Excess cost over historical cost 
        basis of subsidiaries purchased 
        from related parties                                                                            (52,733)      (52,733)
                                            -----------   -----------   -----------   -----------   -----------   -----------
      Balance, September 30, 1995               356,222       100,000     1,786,991       (11,884)    1,675,738     3,907,067
      </TABLE>




                                               F-5
      <PAGE>
     SUMMIT SECURITIES, INC. AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY, CONTINUED
     for the years ended September 30, 1996, 1995 and 1994

     <TABLE>
     <CAPTION>
                                                                                      Net
                                                                                      Unrealized
                                                                        Additional    Gains
                                            Preferred     Common        Paid-In       (Losses) on   Retained
                                            Stock         Stock         Capital       Investments   Earnings      Total
                                            -----------   -----------   -----------   -----------   -----------   -----------
      <S>                                   <C>           <C>           <C>           <C>           <C>           <C>
      Balance, September 30, 1995               356,222       100,000     1,786,991       (11,884)    1,675,738     3,907,067
      Net income                                                                                      1,244,522     1,244,522
      Cash dividends on preferred
        stock (variable rate)                                                                          (333,606)     (333,606)
      Sale of variable rate preferred 
        stock, net of offering costs
        (5,690 shares)                           56,895                     482,146                                   539,041
      Net change in unrealized gains
        on investment securities, net 
        of income taxes of $901                                                             1,750                       1,750
                                            -----------   -----------   -----------   -----------   -----------   -----------
      Balance, September 30, 1996           $   413,117   $   100,000   $ 2,269,137   $   (10,134)  $ 2,586,654   $ 5,358,774
                                            ===========   ===========   ===========   ===========   ===========   ===========
      </TABLE>

      The accompanying notes are an integral part of the consolidated
       financial statements.














                                       F-6
     <PAGE>
     SUMMIT SECURITIES, INC. AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF CASH FLOWS
     for the years ended September 30, 1996, 1995 and 1994


     <TABLE>
     <CAPTION>

                                                      1996          1995          1994
                                                  -----------   -----------   -----------
      <S>                                         <C>           <C>           <C>
      Operating activities:
        Net income                                $ 1,244,522   $   587,559   $   264,879
        Adjustments to reconcile net income
          to net cash provided by (used in) 
          operating activities:
            Proceeds from sale of trading 
              securities                                                       20,077,343
            Purchase of trading securities                                    (20,073,050)
            Realized net gains on sales of 
              investments                                (583)                     (4,252)
            Realized net gains on sales of 
              real estate contracts and mort-
              gage notes and other receivable 
              investments                            (977,441)     (512,500)     (171,756)
            (Gain) loss on sales of real estate        39,552        (6,267)      (12,344)
            Provision for losses on real estate 
              assets                                  490,082       445,381       155,042
            Amortization of deferred costs            487,740       519,280       262,484
            Deferred income tax provision             134,877       164,249       136,500
            Changes in assets and liabilities, 
              net of effects from purchases of 
              subsidiaries:
                Annuity reserves                    3,713,490     1,031,720
                Compound and accrued interest 
                  on investment certificates and 
                  debt payable                       (432,048)    1,714,943     1,229,371
                Accrued interest on real estate 
                  contracts and mortgage notes 
                  receivable                       (1,005,273)     (306,978)      107,423
                Other                              (4,263,513)      365,111       312,110
                                                  -----------   -----------   -----------
                    Net cash provided by (used
                      in) operating activities       (568,595)    4,002,498     2,283,750
                                                  -----------   -----------   -----------
      Investing activities:
        Net cash paid or received associated 
          with purchases of subsidiaries             (761,739)    1,406,873
        Collection of advances to parent and 
          affiliated companies                                                  1,710,743
        Purchase of investment in affiliated 
          company                                  (1,500,000)
        Proceeds from sales of available-for-
          sale investments                                          999,790       992,370
        Purchase of available-for-sale 
          investments                                (275,641)
        Proceeds from maturities of held-to-
          maturity investments                        500,000
        Purchase of held-to-maturity investments     (486,753)
        Principal payments on real estate 
          contracts and mortgage notes 
          receivable                              13,874,707      6,567,102     1,829,515
      </TABLE>


                                       F-7
      <PAGE>
     SUMMIT SECURITIES, INC. AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
     for the years ended September 30, 1996, 1995 and 1994


     <TABLE>
     <CAPTION>

                                                      1996          1995          1994
                                                  -----------   -----------   -----------
      <S>                                         <C>           <C>           <C>
      Investing activities, Continued:
        Principal payments on other receivable 
          investments                                 753,892       393,942
        Purchases of real estate contracts and 
          mortgage
          notes receivable                        (40,100,330)  (26,130,804)  (20,177,705)
        Purchases of other receivable 
          investments                              (7,387,117)  (18,316,371)
        Proceeds from real estate sales                79,686       163,687         6,200
        Additions to real estate held for sale       (292,494)     (141,336)      (82,135)
        Proceeds from sale of real estate 
          contracts and mortgage notes and other 
          receivable investments                   19,430,000    21,350,848    10,393,131
                                                  -----------   -----------   -----------
                    Net cash used in investing 
                      activities                  (15,165,999)  (13,713,689)   (6,320,251)
                                                  -----------   -----------   -----------
      Financing activities:
        Receipts from annuity products             15,632,116     5,903,808
        Withdrawals of annuity products            (6,465,340)   (1,934,898)
        Proceeds from investment certificates      13,291,967     8,585,470    10,539,684
        Repayments of investment certificates      (8,571,918)   (2,847,347)   (2,635,649)
        Borrowings from banks and others            5,752,500
        Repayments to banks and others             (2,043,015)     (193,631)      (48,170)
        Debt issuance costs                          (585,198)     (441,775)     (444,102)
        Excess cost over historical cost basis 
          of subsidiaries purchased from 
          related parties                                                         (52,733)
        Issuance of preferred stock                   539,041       371,956       141,960
        Issuance of common stock                                                  100,000
        Redemption and retirement of common 
          stock                                    (3,600,000)
        Dividends paid on preferred stock            (333,606)     (309,061)       (2,930)
                                                  -----------   -----------   -----------
                    Net cash provided by 
                      financing activities         17,216,547     9,081,789     4,050,793
                                                  -----------   -----------   -----------
      Net increase (decrease) in cash and 
        cash equivalents                            1,481,953      (629,402)       14,292
      Cash and cash equivalents, beginning 
        of year                                     2,979,362     3,608,764     3,594,472
                                                  -----------   -----------   -----------
      Cash and cash equivalents, end of year      $ 4,461,315   $ 2,979,362   $ 3,608,764
                                                  ===========   ===========   ===========
      </TABLE>

     See Note 15 for supplemental cash flow information.

     The accompanying notes are an integral part of the consolidated 
       financial statements.

                                       F-8
     <PAGE>
     SUMMIT SECURITIES, INC. AND SUBSIDIARIES
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      1.  SUMMARY OF ACCOUNTING POLICIES:

            BUSINESS AND REORGANIZATION

            Summit Securities, Inc., d/b/a National Summit Securities, Inc.
            in the states of New York and Ohio (the Company), was incor-
            porated on July 25, 1990. Prior to September 9, 1994, the
            Company was a wholly owned subsidiary of Metropolitan Mortgage
            & Securities Co., Inc. (Metropolitan). Metropolitan is
            controlled by C. Paul Sandifur, Jr. and his immediate family.
            On September 9, 1994, the controlling interest in the Company
            was acquired by National Summit Corp., a Delaware corporation
            which is wholly owned by C. Paul Sandifur, Jr. The change in
            control was made pursuant to a reorganization wherein the
            Company redeemed all the common shares held by its former
            parent company, Metropolitan, which consisted of 100% of the
            outstanding common stock of the Company for $3,600,000, which
            approximated the net book value of the Company at the trans-
            action date. Contemporaneous with this redemption, the Company
            issued 10,000 shares of common stock to National Summit Corp.
            for $100,000. In addition, various investors holding Metro-
            politan's common and preferred stock, including members of Mr.
            Sandifur's immediate family, acquired 30,224 shares of  the
            Company's preferred stock Series S-1 for $100 per share in
            exchange for preferred and common shares of Metropolitan. The
            preferred shares issued for the Metropolitan shares were
            recorded at their face value which approximated recent
            issuances to unrelated parties. The face value of the preferred
            shares approximates fair value due to the variable dividend
            rate associated with such shares (see Note 5).

            On January 31, 1995, the Company consummated an agreement with
            Metropolitan, whereby it acquired Metropolitan Investment
            Securities, Inc. (MIS) effective January 31, 1995 at a purchase
            price of $288,950, which approximated the net book value of MIS
            at the date of purchase. This acquisition was recorded as a
            purchase. However, due to the common control of Metropolitan
            and the Company, the historical cost bases of the assets and
            liabilities of MIS were recorded by the Company.

            On May 31, 1995, the Company consummated an agreement with
            Metropolitan, whereby it acquired Old Standard Life Insurance
            Company (OSL) effective May 31, 1995, for $2,722,000, which
            approximated the historical cost basis of OSL at date of
            purchase, with future contingency payments equal to 20% of
            statutory income prior to the accrual of income taxes for the
            fiscal years ending December 31, 1995, 1996 and 1997. Future
            contingency payments, if any, will be accounted for as




                                       F-9
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      1.  SUMMARY OF ACCOUNTING POLICIES, CONTINUED:

            BUSINESS AND REORGANIZATION, CONTINUED

            dividends. The initial purchase price plus estimated future
            contingency payments approximated the appraised valuation of
            OSL. The acquisition was recorded as a purchase. However, due
            to the common control of Metropolitan and the Company, the
            historical cost bases of assets and liabilities of OSL were
            recorded by the Company. The total purchase price of MIS and
            OSL exceeded the historical cost bases of the net assets of the
            companies by approximately $53,000. Due to the common control
            of Metropolitan and the Company, this excess purchase price has
            been recorded as a dividend through a reduction of retained
            earnings.

            On December 28, 1995, the Company consummated an agreement with
            ILA Financial Services, Inc., whereby 100% of the outstanding
            common stock of Arizona Life Insurance Company (AZL), an
            insurance company domiciled in Arizona, was sold to a wholly
            owned subsidiary of the Company. The purchase price of
            $1,234,000, approximated the net book value of AZL at date of
            purchase. AZL holds licenses to engage in insurance sales in
            seven states and the purchase price included approximately
            $268,000 in value assigned to these state licenses. At the date
            of purchase, AZL was dormant and had no outstanding insurance
            business or other liabilities. AZL's future business activities
            will be the acquisition of real estate mortgage notes and
            contracts using funds derived from the sale of annuities and
            funds derived from receivable cash flows. The acquisition of
            AZL had an immaterial effect on the financial condition and
            operations of the Company.

            Metropolitan is effectively controlled by C. Paul Sandifur, Jr.
            through his common stock ownership and voting control. National
            Summit Corp. is wholly owned by C. Paul Sandifur, Jr. through
            ownership of 100% of the voting stock. National Summit Corp.
            does not have any operations or activities other than the
            holding of  the Company.

            The Company purchases contracts and mortgage notes
            collateralized by real estate and other receivable invest-
            ments with funds generated from the public issuance of debt
            securities in the form of investment certificates, annuity
            products, cash flows from receivable payments, sales of real
            estate and securitization of receivables held for sale.







                                      F-10
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      1.  SUMMARY OF ACCOUNTING POLICIES, CONTINUED:

            PRINCIPLES OF CONSOLIDATION

            The consolidated financial statements include the accounts of
            the Company and its wholly owned subsidiaries, Old Standard
            Life Insurance Company (since May 31, 1995), Metropolitan
            Investment Securities, Inc. (since January 31, 1995), Arizona
            Life Insurance Company (since December 28, 1995) and Summit
            Property Development, Inc. All significant intercompany
            transactions and balances have been eliminated in
            consolidation.

            CASH AND CASH EQUIVALENTS

            The Company considers all highly liquid debt instruments
            purchased with a remaining maturity of three months or less to
            be cash equivalents. Cash includes all balances on hand and on
            deposit in banks and financial institutions. The Company
            periodically evaluates the credit quality of its depository
            financial institutions. Substantially all cash and cash
            equivalents are on deposit with one financial institution and
            balances periodically exceed the FDIC insurance limit.

            INVESTMENTS IN AFFILIATED COMPANIES

            Investments in equity securities of affiliated companies are
            carried at the lower of cost or estimated net realizable value.


            INVESTMENTS

            The Company has classified its investments in debt and equity
            securities, other than those of affiliated companies, as
            "available-for-sale," "held-to-maturity" or "trading." The
            accounting policies related to these investments are as
            follows:
              
              AVAILABLE-FOR-SALE SECURITIES:  Available-for-sale
              securities, consisting primarily of mortgage-backed
              securities are carried at market value. Unrealized gains and
              losses are presented as a separate component of stockholders'
              equity, net of related income taxes.

              HELD-TO-MATURITY SECURITIES:  Held-to-maturity securities,
              consisting primarily of government-backed securities and
              corporate bonds having fixed maturities, are carried at
              amortized cost. The Company has the ability and intent to
              hold these investments until maturity.




                                      F-11
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      1.  SUMMARY OF ACCOUNTING POLICIES, CONTINUED:

            INVESTMENTS, CONTINUED

              TRADING SECURITIES:  Trading securities, consisting primarily
              of government-backed securities and corporate bonds, are
              bought and held principally for the purpose of selling them
              in the near term and are recorded at market value. Realized
              and unrealized gains and losses are included in the
              consolidated statements of income.

            For other than a temporary decline in the value of a common
            stock, preferred stock or publicly traded bonds below their
            cost or amortized cost, the investment is reduced to its net
            realizable value, which becomes the new cost basis of the
            investment. The amount of the reduction is reported as a loss.
            Any recovery of market value in excess of the investment's new
            cost basis is recognized as a realized gain only upon sale,
            maturity or other disposition of the investment. Factors which
            the Company evaluates in determining the existence of an other
            than temporary decline in value include the length of time and
            extent to which market value has been less than cost; the
            financial condition and near-term prospects of the issuers; and
            the intent and ability of the Company to retain its investment
            for the anticipated period of recovery in market value.

            Realized gains and losses on investments are calculated on the
            specific-identification method and are recognized in the
            consolidated statements of income in the period in which the
            investment is sold.

            REAL ESTATE CONTRACTS AND MORTGAGE NOTES RECEIVABLE

            Real estate contracts and mortgage notes receivable held for
            investment purposes are carried at amortized cost. Discounts
            originating at the time of purchase, net of capitalized
            acquisition costs, are amortized using the level yield
            (interest) method. For receivables acquired after September 30,
            1992, net purchase discounts are amortized on an individual
            receivable basis using the interest method over the remaining
            contractual term of the receivable. For receivables acquired
            before October 1, 1992, the Company accounts for its portfolio
            of discounted receivables using anticipated prepayment patterns
            to apply the interest method of amortizing discounts. Dis-
            counted receivables are pooled by the fiscal year of purchase
            and by similar receivable types. The amortization period, which
            is approximately 78 months, estimates a constant prepayment
            rate of 10-12 percent per year and scheduled payments, which is
            consistent with the Company's prior experience on similar
            receivables and the Company's expectations.



                                      F-12
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      1.  SUMMARY OF ACCOUNTING POLICIES, CONTINUED:

            REAL ESTATE CONTRACTS AND MORTGAGE NOTES RECEIVABLE, HELD
            FOR SALE

            Real estate contracts and mortgage notes receivable held for
            sale are carried at the lower of cost (outstanding principal
            adjusted for net discounts and capitalized acquisition costs)
            or market value, determined on an aggregate basis by major type
            of loan. Gains or losses on such sales are recognized utilizing
            the aggregation method for financial reporting and income tax
            purposes at the time of sale. Interest on these receivables is
            included in interest income. Deferred net discounts and
            capitalized acquisition costs are recognized at the time the
            related receivables are sold to third-party investors or
            securitized through transfer to a real estate investment trust.

            OTHER RECEIVABLE INVESTMENTS

            Other receivables held for investment purposes are carried at
            amortized cost. Discounts originating at the time of purchase,
            net of capitalized acquisition costs, are amortized using the
            level yield (interest) method on an individual receivable basis
            over the remaining contractual term of the receivable.

            ALLOWANCES FOR LOSSES ON REAL ESTATE CONTRACTS AND MORTGAGE
            NOTES RECEIVABLE

            The established allowances for losses on real estate contracts
            and mortgage notes receivable include amounts for estimated
            probable losses on receivables determined in accordance with
            the provisions of Statement of Financial Accounting Standards
            (SFAS) No. 114, "Accounting by Creditors for Impairment of a
            Loan," as amended. The Company adopted this new standard on
            October 1, 1995, which did not have a material effect on the
            consolidated financial statements. Specific allowances are
            established for  delinquent receivables, as necessary, with net
            carrying values in excess of $100,000. Additionally, the
            Company establishes allowances, based on prior delinquency and
            loss experience, for currently performing receivables and
            smaller delinquent receivables. Allowances for losses are based
            on the net carrying values of the receivables, including
            accrued interest. Accordingly, the Company continues interest
            accruals on delinquent receivables until foreclosure, unless
            the principal and accrued interest on the receivables exceed
            the fair value of the collateral, net of estimated selling
            costs. The Company obtains new or updated appraisals on
            collateral for appropriate delinquent receivables, and adjusts
            the allowance for losses, as necessary, such that the net
            carrying value does not exceed net realizable value.



                                      F-13
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      1.  SUMMARY OF ACCOUNTING POLICIES, CONTINUED:

            REAL ESTATE HELD FOR SALE

            Real estate is stated at the lower of cost or fair value less
            estimated costs to sell. The Company principally acquires real
            estate through foreclosure or forfeiture. Cost is determined by
            the purchase price of the real estate or, for real estate
            acquired by foreclosure, at the lower of (a) the fair value of
            the property at the date of foreclosure less estimated selling
            costs, or (b) cost (net unpaid receivable carrying value).
            Periodically, the Company reviews the carrying values of real
            estate held for sale by obtaining new or updated appraisals,
            and adjusts its carrying values to the lower of cost or net
            realizable value, as necessary. As a result of changes in the
            real estate markets in which these properties are located, it
            is reasonably possible that these carrying values could change
            in the near term.

            Profit on sales of real estate is recognized when the buyers'
            initial and continuing investment is adequate to demonstrate
            that (1) a commitment to fulfill the terms of the transaction
            exists, (2) collectibility of the remaining sales price due is
            reasonably assured, and (3) the Company maintains no continuing
            involvement or obligation in relation to the property sold and
            transfers all the risks and rewards of ownership to the buyer.

            DEFERRED COSTS

            Commission expense and other annuity policy and investment
            certificate issuance costs are deferred. For investment
            certificate costs, amortization is computed over the expected
            certificate term which ranges from 6 months to 5 years, using
            the level yield (interest) method. For annuity costs, the
            portion of the deferred policy acquisition cost that is
            estimated not to be recoverable from surrender charges is
            amortized as a constant percentage of the estimated gross
            profits (both realized and unrealized) associated with the
            annuities. Changes in the amount or timing of estimated gross
            profits will result in adjustments in the cumulative
            amortization of these costs.

            ANNUITY RESERVES

            Premiums for annuities are recorded as annuity reserves under
            the deposit method. Reserves for annuities are equal to the sum
            of the account balances including deferred service charges.
            Based on past experience, consideration is given in actuarial
            calculations to the number of policyholder and annuitant deaths
            that might be expected, policy lapses, surrenders and
            terminations. As a result in changes in the factors included in
            the actuarial calculations, it is reasonably possible that the
            reserves for annuities could change in the near term.

                                      F-14
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      1.  SUMMARY OF ACCOUNTING POLICIES, CONTINUED:

            RECOGNITION OF ANNUITY REVENUES

            Annuity revenues consist of the charges assessed against the
            annuity account balance for services and surrender charges.
            Charges for future services are assessed; however, the related
            revenue is deferred and recognized in income over the period
            benefitted using the same assumptions as are used to amortize
            deferred policy acquisition costs.

            GUARANTY FUND ASSESSMENTS

            The Company's life insurance subsidiaries are subject to
            insurance guaranty laws in the states in which they operate.
            These laws provide for assessments against insurance companies
            for the benefit of policyholders and claimants in the event of
            insolvency of other life insurance companies. A portion of
            these assessments can be offset against the payment of future
            premium taxes. However, future changes in state laws could
            decrease the amount available for offset. At September 30, 1996
            and 1995, the Company has accrued a liability for guaranty fund
            assessments for known insolvencies, net of estimated recoveries
            through premium tax offsets.

            INCOME TAXES

            The Company accounts for income taxes using the asset and
            liability method. This method requires the Company to recognize
            deferred tax assets and liabilities for the expected future
            income tax consequences of events that have been recognized in
            the financial statements. Deferred tax assets and liabilities
            are determined based on the temporary differences between the
            financial statement carrying amounts and tax bases of assets
            and liabilities using enacted tax rates in effect in the years
            in which the temporary differences are expected to reverse.

            The Company, subsequent to September 9, 1994,  is included in
            the consolidated income tax return with National Summit Corp.
            Prior to that date, the Company was included in the consoli-
            dated income tax return with Metropolitan, its former parent.
            The Company was allocated a current and deferred tax provision
            from National Summit Corp. or Metropolitan as if the Company
            filed a separate tax return.

            In association with the disaffiliation from Metropolitan in
            1994, the Company received certain income tax benefits,
            principally associated with the allocation of the Metropolitan
            consolidated group's net operating loss carryforwards and a
            reduction in amounts payable to Metropolitan, which resulted in
            a reduction of deferred taxes payable of approximately
            $207,000. This benefit has been recorded as additional paid-in
            capital due to the affiliation between Metropolitan and the
            Company.
                                      F-15
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      1.  SUMMARY OF ACCOUNTING POLICIES, CONTINUED:

            EARNINGS PER COMMON SHARE

            Earnings per common share are computed by deducting preferred
            stock dividends from net income and dividing the result by the
            weighted averaged number of shares of common stock outstanding.
            There were no common stock equivalents or potentially dilutive
            securities outstanding during any of the three years in the
            period ended September 30, 1996.

            INTEREST RATE RISK

            The results of operations of the Company may be materially and
            adversely affected by changes in prevailing economic
            conditions, including rapid changes in interest rates. The
            Company's financial assets (primarily real estate contracts and
            mortgage notes receivable, other receivables and investment
            securities) and liabilities (primarily annuity contracts and
            investment certificates) are subject to interest rate risk. In
            the year ending September 30, 1997, approximately $73,300,000
            of the Company's financial liabilities will reprice or mature
            as compared to approximately $13,800,000 of its financial
            assets, resulting in a mismatch of approximately $59,500,000.
            This structure is beneficial in periods of declining interest
            rates; however, may result in declining net interest income
            during periods of rising interest rates. Of the financial
            liabilities scheduled to reprice or mature, approximately 97%
            are annuity contracts which are subject to surrender charges.
            Management is aware of the sources of interest rate risk and
            endeavors to actively monitor and manage its interest rate
            risk, although there can be no assurance regarding the
            management of interest rate risk in future periods.

            ESTIMATES

            The preparation of financial statements in conformity with
            generally accepted accounting principles requires management to
            make estimates and assumptions that affect the reported amounts
            of assets and liabilities and disclosure of contingent assets
            and liabilities at the dates of the financial statements and
            the reported amounts of revenues and expenses during the
            reporting periods. Actual results could differ from those
            estimates.

            RECLASSIFICATIONS

            Certain amounts in the 1995 and 1994 financial statements have
            been reclassified to conform with the 1996 presentation. These
            reclassifications had no effect on net income or retained
            earnings as previously reported.


                                      F-16
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      2.  REAL ESTATE CONTRACTS AND MORTGAGE NOTES RECEIVABLE:

          Real estate contracts and mortgage notes receivable include
          receivables collateralized by property located throughout the
          United States. At September 30, 1996, the Company held first
          position liens associated with real estate contracts and mortgage
          notes receivable with a face value of approximately $72,916,000
          and second position liens of approximately $10,750,000. The
          Company's real estate contracts and mortgage notes receivable at
          September 30, 1996 are collateralized by property concentrated in
          the following geographic regions:

            Pacific Southwest (California, Nevada and Arizona)          25%
            Pacific Northwest (Washington, Alaska, Idaho, Montana
              and Oregon)                                               22
            Southwest (Texas, Louisiana and New Mexico)                 15
            Southeast (Florida, Georgia, North Carolina and
            South Carolina)                                              9
            Other                                                       29
                                                                       --- 
                                                                       100%
                                                                       ===

          The value of real estate properties in these geographic regions
          will be affected by changes in the economic environment of that
          region. It is reasonably possible that these values could change
          in the near term, which would affect the Company's estimate of
          its allowance for losses associated with these receivables.

          The face value of the Company's real estate contracts and
          mortgage notes receivable as of September 30, 1996 and 1995 is
          grouped by the following dollar ranges:

                                                    1996          1995
                                                 -----------   -----------
            Under $15,001                        $ 3,718,664   $ 3,399,194
            $15,001 to $40,000                    22,297,937    22,777,987
            $40,001 to $80,000                    28,746,046    20,210,801
            $80,001 to $150,000                   17,852,524    11,883,730
            Greater than $150,000                 11,050,913     4,057,536
                                                 -----------   -----------
                                                 $83,666,084   $62,329,248
                                                 ===========   ===========





                                      F-17
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      2.  REAL ESTATE CONTRACTS AND MORTGAGE NOTES RECEIVABLE, CONTINUED:

          Contractual interest rates on the face value of the Company's
          real estate contracts and mortgage notes receivable as of
          September 30, 1996 and 1995 are as follows:

                                                    1996          1995
                                                 -----------   -----------
            Less than 8.00%                      $17,315,968   $ 7,003,736
            8.00% to 8.99%                        18,387,426     9,430,059
            9.00% to 9.99%                        19,139,440    13,741,811
            10.00% to 10.99%                      18,781,971    20,058,197
            11.00% to 11.99%                       5,660,121     7,687,561
            12.00% to 12.99%                       2,092,243     2,957,362
            13% or higher                          2,288,915     1,450,522
                                                 -----------   -----------
                                                 $83,666,084   $62,329,248
                                                 ===========   ===========

          The weighted average contractual interest rate on these
          receivables at September 30, 1996 is approximately 8.5%. Maturity
          dates range from 1996 to 2026. The constant effective yield on
          contracts purchased in fiscal 1996 and 1995 was approximately
          10.6% and 10.9%, respectively.

          The following is a reconciliation of the face value of the real
          estate contracts and mortgage notes receivable to the Company's
          carrying value at September 30, 1996 and 1995.

                                                    1996          1995
                                                 -----------   -----------
            Face value of discounted receiv-
              ables                              $73,226,348   $51,768,999
            Face value of originated and 
              nondiscounted receivables           10,439,736    10,560,249
            Unrealized discounts, net of 
              unamortized acquisition costs       (4,733,938)   (2,614,937)
            Allowance for losses                    (974,487)     (765,130)
            Accrued interest receivable            2,051,094     1,168,038
                                                 -----------   -----------
            Carrying value                       $80,008,753   $60,117,219
                                                 ===========   ===========

          The following is an analysis of the allowance for losses on real
          estate contracts and mortgage notes receivable.


                                      F-18
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      2.  REAL ESTATE CONTRACTS AND MORTGAGE NOTES RECEIVABLE, CONTINUED:

                                                     September 30,
                                            ------------------------------
                                              1996       1995       1994
                                            --------   --------   --------

            Balance, beginning of year      $765,130   $250,572   $ 96,654
            Provision for losses on real 
            estate contracts and 
               mortgage notes receivable     212,600    103,950    103,000
            Additions from acquisition of 
              subsidiary                                310,957
            Recoveries/(write-offs)           (3,243)    99,651     50,918
                                            --------   --------   --------
                                            $974,487   $765,130   $250,572
                                            ========   ========   ========

          At September 30, 1996, the net investment in real estate
          contracts and mortgage notes receivable for which impairment has
          been recognized in accordance with SFAS 114 was approximately
          $110,000, of which approximately $27,000, representing the
          amounts by which the net carrying value of the receivable exceeds
          the fair value of the collateral, has been specifically included
          in the allowance for losses on real estate assets.

          During the year ended September 30, 1996, the average recorded
          investment in impaired receivables was approximately $82,000.
          Interest income in the approximate amount of $7,000 was
          recognized on these receivables during the period in which they
          were impaired.

          The principal amount of receivables with required principal or
          interest payments being in arrears for more than three months was
          approximately $3,375,000 and $2,675,000 at September 30, 1996 and
          1995, respectively.

          During the year ended September 30, 1995, the Company sold
          approximately $19,600,000 of real estate contracts and mortgage
          notes receivables without recourse and recognized gains of
          approximately $384,000. These sales were primarily made to
          affiliated companies at estimated fair value which resulted in
          the recognition of approximately $212,000 of the gain.

                                      F-19
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      2.  REAL ESTATE CONTRACTS AND MORTGAGE NOTES RECEIVABLE, CONTINUED:

          Aggregate amounts of the face value of the Company's real estate
          contracts and mortgage notes receivable at September 30, 1996
          expected to be received, based upon contractual payments, are as
          follows:

            Fiscal Year Ending
               September 30,
            ------------------
              1997                                $ 2,704,968
              1998                                  3,140,885
              1999                                  3,418,511
              2000                                  3,720,676
              2001                                  4,049,550
              Thereafter                           66,631,494
                                                  -----------
              Total                               $83,666,084
                                                  ===========


      3.  REAL ESTATE CONTRACTS AND MORTGAGE NOTES RECEIVABLE, HELD FOR 
          SALE:

          Real estate contracts and mortgage notes receivable, held for
          sale consist of a pool of receivables which are intended to be
          securitized and sold without recourse in a private placement. On
          November 26, 1996, the Company securitized and sold all real
          estate contracts and mortgage notes receivable held for sale at
          September 30, 1996, which resulted in a pretax gain of
          approximately $348,000.

          The Company entered into a securitization transaction during the
          year ended September 30, 1996. The Company participates in these
          securitization transactions with its subsidiaries, Metropolitan
          and Metropolitan's subsidiaries. These receivables are structured
          in classes by credit rating and transferred to a real estate
          trust, which sells pass-through certificates to third parties.
          These securitizations are recorded as sales of receivables and
          gains, net of transaction expenses, and are recognized in the
          consolidated statements of income as each class is sold.












                                      F-20
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      3.  REAL ESTATE CONTRACTS AND MORTGAGE NOTES RECEIVABLE, HELD FOR 
          SALE, CONTINUED:

          During the year ended September 30, 1996, proceeds from
          securitization transactions were approximately $7,009,000 and
          resulted in gains of approximately $297,300. The gain realized
          included approximately $99,000 associated with the estimated fair
          value of the mortgage servicing rights retained on the pool. The
          fair value of these rights was determined based on the estimated
          present value of future net servicing cash flows, including float
          interest and late fees, adjusted for anticipated prepayments. The
          Company evaluates possible impairment in its mortgage servicing
          rights by similar type of loan and to the extent that carrying
          value for a stratum exceeds its estimated fair value, an
          impairment loss is recognized. These mortgage servicing rights
          were subsequently sold to an affiliated entity prior to September
          30, 1996 at the Company's carrying value.

          Of the receivables securitized, the Company has retained an
          investment in certain classes of the securities having a fair
          value of approximately $269,000 at September 30, 1996. These
          securities were transferred to the Company's investment portfolio
          and classified as available-for-sale. These certificates are the
          B-4 rated and residual certificate classes and are subordinate to
          the other offered classes of certificates. These classes receive
          the lowest priority of principal and interest distributions and
          thus bear the highest credit risk. The Company provides for this
          risk by reducing the interest yield on these securities and by
          providing a reserve for the principal distributions due on these
          subordinate classes which may not be received due to default or
          loss. The weighted average constant effective yield recognized by
          the Company on these securities was 13.2% at September 30, 1996.

          In June 1996, Statement of Financial Accounting Standards No. 125
          (SFAS 125), "Accounting for Transfers and Servicing of Financial
          Assets and Extinguishments of Liabilities" was issued. SFAS 125
          provides accounting and reporting standards based on a consistent
          application of a financial-components approach that focuses on
          control. Under this approach, after a transfer of financial
          assets, an entity recognizes the financial and servicing assets
          it controls and the liabilities it has incurred, derecognizes
          financial assets when control has been surrendered and
          derecognizes liabilities when extinguished. This statement
          provides consistent standards for distinguishing transfers of
          financial assets that are sales from transfers that are secured
          borrowings. SFAS 125 is effective for transfers and servicing of
          financial assets and extinguishments of liabilities occurring
          after December 31, 1996. The Company does not expect that the
          application of the provisions of SFAS 125 will have a material
          effect on the Company's financial condition, results of
          operations or cash flows.


                                      F-21
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      4.  OTHER RECEIVABLE INVESTMENTS:

          Other receivable investments include various cash flow invest-
          ments primarily comprised of annuities and lottery prizes.
          Annuities are general obligations of the payor, which is
          generally an insurance company. Lottery prizes are general
          obligations of the insurance company or other entity making the
          lottery prize payments. Additionally, when the lottery prizes are
          from a state-run lottery, the lottery prizes are often backed by
          the general credit of the state.

          These investments normally are non-interest bearing and are
          purchased at a discount sufficient to meet the Company's
          investment yield requirements. The weighted average constant
          effective yield on these receivables at September 30, 1996 is
          approximately 12.4%. Maturities range from 1996 to 2035.

          The following is a reconciliation of the face value of the other
          receivable investments to the Company's carrying value at
          September 30, 1996 and 1995.

                                                    1996          1995
                                                 -----------   -----------
            Face value of receivables            $19,103,098   $28,618,310
            Unrealized discounts, net of 
              unamortized acquisition costs       (7,314,968)  (11,722,408)
                                                 -----------   -----------
            Carrying value                       $11,788,130   $16,895,902
                                                 ===========   ===========

          All such receivables at September 30, 1996 were performing in
          accordance with their contractual terms.

          During the years ended September 30, 1996 and 1995, the Company
          sold approximately $11,741,000 and $1,260,000, respectively, of
          these receivables without recourse and recognized gains of
          approximately $680,100 and $128,500, respectively.

          The following individual other receivable investments were in
          excess of ten percent of stockholders' equity at September 30,
          1996 and 1995.

                                                               Aggregate
                                                               Carrying
                        Issuer                                 Amount
            -------------------------------------              -----------
            1996:
              Michigan State Agency                            $ 1,738,909
              Safeco Life Insurance Company                        977,150
              New York State Agency                                966,639
              Arizona State Agency                                 949,675
              Transamerica Life Insurance Company                  666,994

                                      F-22
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      4.  OTHER RECEIVABLE INVESTMENTS, CONTINUED:

                                                               Aggregate
                                                               Carrying
                        Issuer                                 Amount
            -------------------------------------              -----------
            1995:
              Arizona State Agency                               3,344,695
              New Jersey State Agency                            2,933,380
              New York State Agency                              2,364,728
              California State Agency                            2,036,041
              Michigan State Agency                                906,801

          Aggregate amounts of contractual maturities of other receivables
          (face amounts) at September 30, 1996 are as follows:

            Fiscal Year Ending
               September 30,
            ------------------
                   1997                          $ 2,549,061
                   1998                            2,553,440
                   1999                            2,106,077
                   2000                            2,296,522
                   2001                            1,599,414
                Thereafter                         7,998,584
                                                 -----------
                Total                            $19,103,098
                                                 ===========

      5.  INVESTMENTS IN AFFILIATED COMPANIES:

          At September 30, 1996 and 1995, investments in affiliated
          companies consisted of:

                                                   Cost and Carrying Value
                                       Number of   -----------------------
            Type of Shares             Shares         1996         1995
            -------------------------  ---------   ----------   ----------
            Metropolitan Mortgage & 
              Securities Co., Inc.:
                Class A common                 9   $  420,205   $  420,205
                Preferred:
                  Series C               116,094    1,160,942    1,160,942
                  Series D                24,328      243,278      243,278
                  Series E-1             105,800    1,058,000    1,058,000
                  Series E-4               1,400      140,000      140,000
                                                   ----------   ----------
                                                    3,022,425    3,022,425
            Consumers Group Holding 
              Co., Inc.:
                Common                        19    1,500,000
                                                   ----------   ----------
                                                   $4,522,425   $3,022,425
                                                   ==========   ==========
                                      F-23
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      5.  INVESTMENTS IN AFFILIATED COMPANIES, CONTINUED:

          Class A common stock is the only voting class of Metropolitan's
          stock. Class A common stock is junior to Class B common stock as
          to liquidation preference. At September 30, 1996 and 1995, the
          Company owned 7.09% of Metropolitan's outstanding Class A common
          stock.

          The preferred stock of Metropolitan has a par value of $10 per
          share and has liquidation preferences equal to its issue price.
          They are non-voting and are senior to the common shares as to
          dividends. Dividends are cumulative and at variable rates;
          however, dividends shall be no less than 6% or greater than 14%
          per annum. At September 30, 1996, the preferred Series C, D and
          E-1 had dividend rates of 7.95%. The preferred Series E-4 had a
          dividend rate of 8.45%. Neither the common nor preferred shares
          are traded in a public market.

          At September 30, 1996, the Company owned 3.49% of the outstanding
          common stock of Consumers Group Holding Co., Inc. The Company
          acquired the stock investment in April 1996 in a cash purchase
          from C. Paul Sandifur, Jr. The remaining outstanding shares of
          common stock of Consumers Group Holding Co., Inc. are owned
          by Metropolitan. Consumers Group Holding Co., Inc. owns
          approximately 74.5% of Western United Life Insurance Company
          (Western), a life insurer domiciled in the state of Washington.
          Western had total assets of approximately $1.1 billion at
          September 30, 1996.


      6.  INVESTMENTS:

          A summary of carrying and estimated market values of investments
          at September 30, 1996 and 1995 is as follows:

     <TABLE>
     <CAPTION>
                                                               1996
                                        -------------------------------------------------
                                                                               Estimated
                                                                               Market
                                                     Gross        Gross        Value
                                        Amortized    Unrealized   Unrealized   (Carrying
            Available-for-Sale          Cost         Gains        Losses       Value)
            -------------------------   ----------   ----------   ----------   ----------
            <S>                         <C>          <C>          <C>          <C>
            Pass-Through Certificates   $  269,305   $        0   $        0   $  269,305
                                        ==========   ==========   ==========   ==========
      </TABLE>






                                      F-24
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      6.  INVESTMENTS, CONTINUED:

     <TABLE>
     <CAPTION>
                                                               1996
                                        -------------------------------------------------
                                        Amortized
                                        Cost         Gross        Gross        Estimated
                                        (Carrying    Unrealized   Unrealized   Market
            Held-to-Maturity            Value)       Gains        Losses       Value
            -------------------------   ----------   ----------   ----------   ----------
            <S>                         <C>          <C>          <C>          <C>
            U.S. Government Bonds       $5,735,579   $        0   $ (111,140)  $5,624,439
            Corporate Bonds              2,014,499            0      (16,744)   1,997,755
                                        ----------   ----------   ----------   ----------
                                        $7,750,078   $        0   $ (127,884)  $7,622,194
                                        ==========   ==========   ==========   ==========
      <CAPTION>

                                                               1995
                                        -------------------------------------------------
                                        Amortized
                                        Cost         Gross        Gross        Estimated
                                        (Carrying    Unrealized   Unrealized   Market
            Held-to-Maturity            Value)       Gains        Losses       Value
            -------------------------   ----------   ----------   ----------   ----------
            <S>                         <C>          <C>          <C>          <C>
            U.S. Government Bonds       $5,229,949   $        0   $ (144,091)  $5,085,858
            Corporate Bonds              3,039,592            0      (53,985)   2,985,607
                                        ----------   ----------   ----------   ----------
                                        $8,269,541   $        0   $ (198,076)  $8,071,465
                                        ==========   ==========   ==========   ==========
      </TABLE>


        All bond held at September 30, 1996 were performing in accordance
        with their terms.

        During the year ended September 30, 1996, in accordance with a
        Special Report issued by the Financial Accounting Standards Board,
        OSL reassessed and reclassified held-to-maturity debt securities
        with a carrying value of approximately $999,000 to the available-
        for-sale classification. At the date of the transfer, the debt
        securities were valued at fair value of approximately $999,000.

        During the year ended September 30, 1995, upon the acquisition of
        OSL, the Company reclassified an investment with an amortized cost
        of approximately $992,000 from held-to-maturity to available-for-
        sale. The investment was subsequently sold in 1995 at a loss of
        approximately $8,000 when the issuer called the bond.

                                      F-25
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      6.  INVESTMENTS, CONTINUED:

          During the year ended September 30, 1994, prior to its
          acquisition, OSL transferred approximately $6,000,000 of
          investments from its available-for-sale portfolio to its held-to-
          maturity portfolio. At the date of transfer, these investments
          had net unrealized losses of approximately $29,000 before income
          taxes. These unrealized losses are being recognized over the
          remaining term of the investments transferred using the interest
          method. At September 30, 1996, the remaining unamortized loss of
          $10,134, net of income taxes, is reported as a reduction of
          stockholders' equity.

          The following individual investments (excluding U.S. government
          bonds) held by the Company at September 30, 1996 and 1995 were in
          excess of ten percent of stockholders' equity:

                                                               Aggregate
                                                               Carrying
                        Issuer                                 Amount
            ---------------------------------------            -----------
            1996:
              Corporate Bonds:
                General Electric Credit Corporation            $ 1,012,613
                Wal-Mart Stores                                  1,001,886

            1995:
              Corporate Bonds:
                Countrywide Funding                              1,004,526
                General Electric Credit Corporation              1,031,930
                Wal-Mart Stores                                  1,003,136


          At September 30, 1996, the contractual maturities of the held-to-
          maturity securities are shown below. Expected maturities will
          differ from contractual maturities because issuers may have the
          right to call or prepay obligations with or without call or pre-
          payment penalties.


                                                 Estimated
                                                 Amortized     Market
            Held-to-Maturity Securities          Cost          Value
            -----------------------------------  -----------   -----------

              Due in one year or less            $ 1,511,471   $ 1,506,609
              Due after one year through five 
                years                              6,238,607     6,115,585
                                                 -----------   -----------
                                                 $ 7,750,078   $ 7,622,194
                                                 ===========   ===========


                                      F-26
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      7.  DEBT PAYABLE:

          At September 30, 1996 and 1995, debt payable consists of:


                                                    1996          1995
                                                 -----------   -----------

            Reverse repurchase agreements with 
              various securities brokers, 
              interest at 5.9% per annum; due 
              on October 1, 1996; collateral-
              ized by $3,900,000 in U.S. 
              Treasury bonds                     $ 3,802,500

            Real estate contracts and mortgage 
              notes payable, interest rates 
              ranging from 7% to 8.5%, due in 
              installments through 2002, 
              collateralized by senior liens 
              on certain of the Company's real 
              estate contracts, mortgage notes 
              receivable and real estate held 
              for sale                                37,875   $   104,067

            Accrued interest payable                  10,595           569
                                                 -----------   -----------
                                                 $ 3,850,970   $   104,636
                                                 ===========   ===========

          Aggregate amounts of principal and accrued interest due on debt
          payable at September 30, 1996 are as follows:

            Fiscal Year Ending
               September 30,
            ------------------
                   1997                          $ 3,823,744
                   1998                               11,553
                   1999                               11,612
                   2000                                1,806
                   2001                                1,760
                Thereafter                               495
                                                 -----------
                Total                            $ 3,850,970
                                                 ===========








                                      F-27
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      8.  INVESTMENT CERTIFICATES:

          At September 30, 1996 and 1995, investment certificates consist
          of:

            Annual
            Interest     Principally
            Rates        Maturing in                1996          1995
            ----------   -------------------     -----------   -----------

            6% to 7%     1997 and 1998           $ 1,547,283   $   810,558
            7% to 8%     1997, 1998 and 1999       1,946,646     1,789,822
            8% to 9%     1999, 2000 and 2001      26,380,522    22,070,089
            9% to 10%    1997 and 2001             8,370,330     2,831,765
            10% to 11%   1997 and 2001               199,926     6,222,424
                                                 -----------   -----------
                                                  38,444,707    33,724,658
            Compound and accrued interest          4,379,164     4,821,238
                                                 -----------   -----------
            Totals                               $42,823,871   $38,545,896
                                                 ===========   ===========

          The weighted average interest rate on outstanding investment
          certificates at September 30, 1996 and 1995 was approximately
          8.5% and 8.8%, respectively.

          Investment certificates (including principal and compound and
          accrued interest) at September 30, 1996 mature as follows:

            Fiscal Year Ending
               September 30,
            ------------------
                   1997                          $ 7,085,000
                   1998                            9,834,000
                   1999                            8,361,000
                   2000                            6,822,000
                   2001                           10,528,000
                Thereafter                           193,871
                                                 -----------
                Total                            $42,823,871
                                                 ===========












                                      F-28
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      9.  DEFERRED COSTS:

          An analysis of deferred costs related to annuity acquisition and
          investment certificates for the years ended September 30, 1996,
          1995 and 1994 is as follows:

     <TABLE>
     <CAPTION>
                                                  Annuity       Investment
                                                  Acquisition   Certificates   Total
                                                  -----------   ------------   ----------
                <S>                               <C>           <C>            <C>
              Balance, September 30, 1993                       $    524,376   $  524,376
                Deferred during the period:
                  Commissions                                        299,748      299,748
                  Other expense                                      144,354      144,354
                                                  -----------   ------------   ----------
                Total deferred costs                                 968,478      968,478
                Amortized during the period                         (262,484)    (262,484)
                                                  -----------   ------------   ----------
              Balance, September 30, 1994                            705,994      705,994
                Increase due to acquisition of 
                  life insurance affiliate        $ 2,614,778                   2,614,778
                Deferred during the period:
                  Commissions                         291,050        259,633      550,683
                  Other expense                        47,885        182,142      230,027
                                                  -----------   ------------   ----------
                Total deferred costs                2,953,713      1,147,769    4,101,482
                Amortized during the period          (198,190)      (321,090)    (519,280)
                                                  -----------   ------------   ----------
              Balance, September 30, 1995           2,755,523        826,679    3,582,202
                Deferred during the period:
                  Commissions                         722,861        390,713    1,113,574
                  Other expense                       459,525        194,485      654,010
                                                  -----------   ------------   ----------
                Total deferred costs                3,937,909      1,411,877    5,349,786
                Amortized during the period           (84,773)      (402,967)    (487,740)
                                                  -----------   ------------   ----------
              Balance, September 30, 1996         $ 3,853,136   $  1,008,910   $4,862,046
                                                  ===========   ============   ==========
      </TABLE>

          The amortization of deferred annuity acquisition costs, which is
          based on the estimated gross profits of the underlying annuity
          products, could be changed significantly in the near term due to
          changes in the interest rate environment. As a result, the
          recoverability of these costs may be adversely affected in the
          near term.

                                      F-29
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     10.  INCOME TAXES:

          The tax effect of the temporary differences giving rise to the
          Company's deferred tax assets and liabilities as of September 30,
          1996 and 1995 is as follows:

            1996                                  Assets       Liabilities
            -----------------------------------   ----------   -----------
            Mark to market for investment 
              securities                          $    5,238
            Guaranty fund assessments                180,645
            Annuity reserves                         734,150
            Management fee payable                             $  215,686
            Allowance for losses on real estate 
              and receivables                        362,436
            Deferred policy acquisition costs                   1,724,548
            Deferred contract acquisition costs 
              and discount yield recognition                      958,473
            Net operating loss carryforwards         189,416
            Other                                        743
                                                  ----------   ----------
            Total deferred income taxes           $1,472,628   $2,898,707
                                                  ==========   ==========
            1995                                  Assets       Liabilities
            -----------------------------------   ----------   -----------
            Mark to market for investment 
              securities                                       $   73,468
            Guaranty fund assessments             $  150,045
            Annuity reserves                         597,743
            Management fee payable                                402,101
            Allowance for losses on real estate 
              and receivables                        196,202
            Deferred policy acquisition costs                     936,878
            Deferred contract acquisition costs 
              and discount yield recognition                    1,486,157
            Net operating loss carryforwards         535,500
            Other                                    127,912
                                                  ----------   ----------
            Total deferred income taxes           $1,607,402   $2,898,604
                                                  ==========   ==========

          No valuation allowance has been established to reduce the
          deferred tax assets, as it is more likely than not that these
          assets will be realized due to the future reversals of existing
          taxable temporary differences. At September 30, 1996, the
          Company's remaining net operating loss carryforwards of
          approximately $560,000 expire in years 2006 through 2010. 

          Realization is dependent on the generation of sufficient taxable
          income prior to expiration of the net operating loss
          carryforwards. The amount of the deferred tax asset considered
          realizable, however, could be reduced in the near term if
          estimates of future taxable income during the carryforward period
          are reduced.

                                      F-30
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     10.  INCOME TAXES, CONTINUED:

          Due to the Company's previous change in ownership, the above net
          operating losses are subject to the provisions of Internal
          Revenue Code Section 382, which limits the annual utilization of
          net operating losses to approximately $200,000 per year.

          Following is a reconiliation of the provision for income taxes to
          an amount computed by applying the statutory federal income tax
          rate to income before income taxes as follows:

                                              1996       1995       1994
                                            --------   --------   --------
            Federal income tax at statu-
              tory rate                     $504,041   $281,270   $137,797
            Affiliate corporate dividend 
              received deduction             (47,661)   (49,921)
            Small life insurance company 
              deduction                     (225,669)
            Other                              7,240      8,358      2,610
                                            --------   --------   --------
            Income tax provision            $237,951   $239,707   $140,407
                                            ========   ========   ========

          The components of the provision for income taxes are as follows:

                                              1996       1995       1994
                                            --------   --------   --------
            Current                         $103,074   $ 75,458   $  3,907
            Deferred                         134,877    164,249    136,500
                                            --------   --------   --------
                                            $237,951   $239,707   $140,407
                                            ========   ========   ========

                                      F-31
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     11.  STOCKHOLDERS' EQUITY:

          A summary of preferred and common stock at September 30, 1996 and
          1995 is as follows:
     <TABLE>
     <CAPTION>
                                                         Issued and Outstanding Shares
                                                         ----------------------------------
                                   Authorized Shares           1996              1995
                                   --------------------  ----------------  ----------------
                                     1996      1995      Shares  Amount    Shares  Amount
                                   --------- ---------   ------  --------  ------  --------
              <S>                  <C>       <C>         <C>     <C>       <C>     <C>
              Registered 
                 preferred stock:
                   Series S-1        185,000   185,000   36,460  $364,603  35,622  $356,222
                   Series S-2        150,000              4,852   48,514
                   Series S-RP        80,000
                                   --------- ---------   ------  --------  ------  --------
                                     415,000   185,000   41,312  $413,117  35,622  $356,222
                                   ========= =========   ======  ========  ======  ========
              Common stock         2,000,000 2,000,000   10,000  $100,000  10,000  $100,000
                                   ========= =========   ======  ========  ======  ========
      </TABLE>
            The Company has authorized 10,000,000 total shares of Series S 
            preferred stock, of which varying amounts of shares of Series S-1, 
            S-2 and S-RP were registered at September 30, 1996. The Company 
            has the right, without further stockholder approval, to 
            establish additional series of preferred stock with provisions
            different than those described below for the Series S-1, S-2 and 
            S-RP preferred stock.

            Series S-1, S-2 and S-RP preferred stock is cumulative and the 
            holders thereof are entitled to receive monthly dividends at an 
            annual rate equal to the highest of the "Treasury Bill Rate," 
            the "Ten Year Constant Maturity Rate" or the "Twenty Year 
            Constant Maturity Rate" as defined in the offering prospectus
            determined immediately prior to declaration date. The board of 
            directors may, at its sole option, declare a higher dividend 
            rate; however, dividends shall be no less than 6% or greater 
            than 14% per annum.

            Series S-1, S-2 and S-RP preferred stock have a par value of 
            $10 per share and were or will be sold to the public at $100 
            per share. Series S-1 and S-2 shares are callable at the sole 
            option of the board of directors at $100 per share. Series S-RP 
            shares are callable at the sole option of the board of directors 
            at $102 per share before October 1, 1997 and at $100 per share 
            after September 30, 1997.

            All preferred shares have liquidation preferences equal to their 
            issue price, are non-voting and are senior to the common shares 
            as to dividends. All preferred stock dividends are based upon 
            the original issue price.

                                               F-32
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

       11.  STOCKHOLDERS' EQUITY, CONTINUED:

            The payment of dividends by the Company's wholly owned life 
            insurance subsidiaries are subject to certain restrictions imposed 
            by statute (see Note 14). Dividends can only be paid out of earned 
            surplus. Earned surplus includes accumulated statutory basis 
            earnings of the Company and surplus arising from unrealized 
            capital gains or the revaluation of assets. 

            The Idaho Insurance Code presently requires the life insurance 
            subsidiary domiciled in the state of Idaho to maintain $1 
            million in common stock and $1 million in contributed surplus. 
            This restriction on the payment of dividends by this life 
            insurance subsidiary provided that $194,000 was available for
            the payment of dividends at September 30, 1996.

            The Arizona Insurance Code presently requires the life insurance 
            subsidiary domiciled in the state of Arizona to maintain $450,000 
            in common stock and contributed surplus. This life insurance 
            subsidiary had earned surplus (deficit) of $(1,196,000) at 
            September 30, 1996 and thus is currently restricted from
            paying dividends.


       12.  RELATED-PARTY TRANSACTIONS:

            The Company receives accounting, data processing, contract 
            servicing and other administrative services from Metropolitan. 
            Charges for these services were approximately $586,000, 
            $315,000 and $58,000 in fiscal 1996, 1995 and 1994, respectively, 
            and were assessed based on the number of real estate contracts
            and mortgage notes receivable serviced by Metropolitan on the 
            Company's behalf.  Other indirect services provided by 
            Metropolitan to the Company, such as management and regulatory 
            compliance, were not directly charged to the Company.

            Management believes that these charges are reasonable and result 
            in the reimbursement to Metropolitan of all significant direct 
            expenses incurred on behalf of the Company and its subsidiaries. 
            Currently, management anticipates that Metropolitan will continue 
            to supply these services in the future.

















                                               F-33
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

       12.  RELATED-PARTY TRANSACTIONS, CONTINUED:

            The Company had the following related-party transactions with 
            Metropolitan and affiliates during fiscal years 1996, 1995 
            and 1994:

     <TABLE>
     <CAPTION>

                                                     1996          1995          1994
                                                  -----------   -----------   -----------
              <S>                                 <C>           <C>           <C>
              Real estate contracts and mort-
                 gage notes receivable and 
                 other receivable investments 
                 purchased through Metropolitan 
                 or affiliates                    $45,734,241   $42,479,766   $19,495,714

              Capitalized acquisition costs 
                 charged to the Company on pur-
                 chased real estate contracts 
                 and mortgage notes receivable, 
                 including management under-
                 writing fees                       1,753,206     1,967,409       681,991
                                                  -----------   -----------   -----------
              Total cost of real estate con-
                 tracts and mortgage notes and
                 other receivable investments 
                 purchased through Metropolitan   $47,487,447   $44,447,175   $20,177,705
                                                  ===========   ===========   ===========
              Real estate contracts and mort-
                 gage notes receivable and other 
                 receivable investments sold to 
                 Metropolitan or its affiliates                 $17,098,581   $10,122,544

              Gains on real estate contracts and 
                 mortgage notes receivable and 
                 other receivable investments 
                 sold to Metropolitan or its 
                 affiliates                                         335,469

              Service fees charged to Metro-
                 politan for property develop-
                 ment assistance                  $ 2,038,202     1,250,017

              Commissions and service fees 
                 charged to Metropolitan on 
                 sale of Metropolitan's 
                 debentures and preferred stock       369,080     1,124,481

              Interest expense paid to Metro-
                 politan and its affiliated 
                 companies                                                         11,684
     </TABLE>

                                              F-34
    <PAGE>
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     12.  RELATED-PARTY TRANSACTIONS, CONTINUED:

    <TABLE>
    <CAPTION>

                                                     1996          1995          1994
                                                  -----------   -----------   -----------
              <S>                                 <C>           <C>           <C>
              Commissions capitalized as 
                 deferred costs, paid to a 
                 Metropolitan affiliate on sale 
                 of debentures                                       86,491       299,748

              Commissions deducted from addi-
                 tional paid-in capital, paid to 
                 a Metropolitan affiliate on 
                 sale of preferred stock                             13,249         7,552

              Dividends received on Metro-
                 politan's preferred stock 
                 investments                          200,256       256,991

     </TABLE>

          Receivables from Metropolitan or its affiliates of $1,296,290 at
          September 30, 1996 represent amounts owed to the Company related
          primarily to collections on real estate contract and mortgage note
          receivables and are included in other assets. Advances due
          Metropolitan or its affiliates in the amount of $1,960,104 at
          September 30, 1995 represent real estate contracts and mortgage
          notes receivable and related costs advanced by Metropolitan on
          behalf of the Company and are included in accounts payable.

          The Company receives management, receivable acquisition and
          receivable collections services from Metropolitan for a fee
          pursuant to the terms of the Management, Receivable Acquisition
          and Servicing Agreement. The receivable acquisition fees are based
          upon yield requirements established by the Company. The Company
          pays, as its receivable acquisition service fee, the difference
          between the yield requirement and the yield which Metropolitan
          actually negotiates when the receivable is acquired. During the
          year ended September 30, 1996, 1995 and 1994, the Company incurred
          service fees for receivable acquisition from Metropolitan of
          approximately $1,753,000, $1,967,000 and $682,000, respectively.
          The agreements are non-exclusive and may be terminated in whole or
          part by either party upon notice to the other party.

          MIS is a securities broker/dealer and member of the National
          Association of Securities Dealers. It markets the securities
          products of Summit and of Metropolitan. MIS charges commissions
          ranging from .25% to 6% of the face value of the security sold.
          The commission rate depends on the type of security sold, its 



                                      F-35
    <PAGE>
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     12.  RELATED-PARTY TRANSACTIONS, CONTINUED:

          stated term and whether the security sale involved a reinvestment
          by a prior investor or a new investment. Commissions and service
          fees charged to Metropolitan during the years ended September 30,
          1996 and 1995 were approximately $369,000 and $1,125,000,
          respectively.

          Summit Property Development, Inc., a wholly owned subsidiary of
          Summit, provides real estate development services for a fee.
          Currently its principal client is Metropolitan. Such services may
          include, but are not limited to the following: sales, marketing,
          market analysis, architectural services, design services,
          subdividing properties and coordination with regulatory groups to
          obtain the approvals which are necessary to develop a particular
          property. The fees charged to Metropolitan for these services were
          approximately $2,038,000 and $1,250,000 during the years ended
          September 30, 1996 and 1995, respectively.

          The Company's employees are included in the Metropolitan Mortgage
          & Securities Co., Inc. Retirement Savings Plan (the Plan),
          authorized under Section 401(k) of the Tax Reform Act of 1986, as
          amended. This Plan is available to all employees over the age of
          21 upon completion of six months of service in which he or she has
          earned 500 hours of service. Employees may defer from 1% to 15% of
          their compensation in multiples of whole percentages. The Company
          matches contributions equal to 25% of pre-tax contributions up to
          a maximum of 6% of compensation. This match is made only if the
          Company has a net profit during the preceding fiscal year. In lieu
          of services performed, the contribution relating to the Company's
          employees was made by Metropolitan during the years ended
          September 30, 1996, 1995 and 1994.


     13.  ANNUITY RESERVES AND GUARANTY FUND ASSESSMENTS:

          Annuity reserves are based upon contractual amounts due the
          annuity holder including accrued interest. Annuity contract
          interest rates ranged from 5.4% to 10.4% during the year ended
          September 30, 1996 and 5.75% to 10.65% during the four-month
          period ended September 30, 1995.

          All states in which the Company's insurance subsidiaries operate
          have laws requiring solvent life insurance companies to pay
          assessments to protect the interests of policyholders of insolvent
          life insurance companies. Assessments are levied on all member
          insurers in each state based on a proportionate share of premiums
          written by member insurers in the lines of business in which the
          insolvent insurers engaged. A portion of these assessments can be
          offset against the payment of future premium taxes. However,
          future changes in state laws could decrease the amount available
          for offset.

                                      F-36
    <PAGE>
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     13.  ANNUITY RESERVES AND GUARANTY FUND ASSESSMENTS, CONTINUED:

          The net amount expensed by the Company's life insurance
          subsidiaries for guaranty fund assessments and amounts estimated
          to be assessed for the year ended September 30, 1996 and the four-
          month period ended September 30, 1995 were $90,000 and $25,000,
          respectively. The Company's estimate of these liabilities is based
          upon updated information from the National Organization of Life
          and Health Insurance Guaranty Associations regarding insolvencies
          occurring during the years 1990 through 1994. These estimates are
          subject to future revisions based upon the ultimate resolution of
          the insolvencies and resultant losses. The Company cannot
          reasonably estimate the additional effects, if any, upon its
          future assessments pending the resolution of the above-described
          insolvencies. As a result of these uncertainties, the Company's
          estimate of future assessments could change in the near term.  The
          Company does not believe that the amount of future assessments
          associated with known insolvencies after 1994 will be material to
          its financial condition or results of operations. At September 30,
          1996, an estimated future guaranty fund assessment of
          approximately $334,000 has been recorded, which is net of a 7%
          discount rate applied to the estimated payment term of
          approximately seven years.


     14.  STATUTORY ACCOUNTING:

          The life insurance subsidiaries of the Company are required to
          file statutory financial statements with state insurance
          regulatory authorities in their states of domicile. Accounting
          principles used to prepare these statutory financial statements
          differ from generally accepted accounting principles (GAAP).
          Selected differences between the statutory and the GAAP financial
          statements for the insurance subsidiaries as of and for the years
          ended September 30, 1996 and 1995, respectively, are as follows:

                                                Statutory     GAAP
                                                -----------   -----------
            Stockholders' equity:
              1996                              $ 9,505,116   $11,396,286
              1995                                2,248,969     2,743,415

            Net income:
            1996                                    374,703     1,285,135
            1995 (four-month period ended 
              September 30, 1995)                    43,574        86,031

            Unassigned statutory funds and 
              retained earnings/(deficit):
                1996                             (1,002,284)    1,138,886
                1995                                248,969       755,299


                                      F-37
    <PAGE>
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     14.  STATUTORY ACCOUNTING, CONTINUED:

          The National Association of Insurance Commissioners (NAIC)
          currently is in the process of codifying statutory accounting
          practices, the result of which is expected to constitute the only
          source of "prescribed" statutory accounting practices.
          Accordingly, that project, which is expected to be completed in
          1997, will likely change, to some extent, prescribed statutory
          accounting practices that insurance enterprises use to prepare
          their statutory financial statements. Written approval was
          received from the Insurance Department of the state of Idaho to
          capitalize the underwriting fees charged to OSL by Metropolitan
          and to amortize these fees as an adjustment of the yield on
          acquired receivables. Statutory accounting practices prescribed by
          the state of Idaho do not describe the accounting required for
          this type of transaction. As of September 30, 1996, this permitted
          accounting practice increased statutory surplus by approximately
          $435,000 over what it would have been had prescribed practices
          disallowed this accounting treatment.

          The regulatory authorities impose minimum risk-based capital
          requirements on insurance enterprises that were developed by the
          NAIC. The formulas for determining the amount of risk-based
          capital (RBC) specify various weighting factors that are applied
          to financial balances or various levels of activity based on
          perceived degree of risk. Regulatory compliance is determined by a
          ratio of the enterprise's regulatory total adjusted capital, as
          defined by the NAIC, to its authorized control level, RBC, as
          defined by the NAIC. Enterprises below specific trigger points or
          ratios are classified within certain levels, each of which
          requires specified corrective action. The RBC measure of the
          insurance subsidiaries at September 30, 1996 and 1995 was above
          the minimum standards.


     15.  SUPPLEMENTAL DISCLOSURES FOR STATEMENTS OF CASH FLOWS:

          Supplemental information on interest and income taxes paid during
          the years ended September 30, 1996, 1995 and 1994 is as follows:
    <TABLE>
    <CAPTION>
                                                     1996          1995          1994
                                                  -----------   -----------   -----------
              <S>                                 <C>           <C>           <C>
              Interest paid                       $ 3,914,390   $ 1,536,137   $ 1,298,248
              Income taxes paid (refunded)            (62,591)      128,190         3,907
     </TABLE>







                                      F-38
    <PAGE>
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


     15.  SUPPLEMENTAL DISCLOSURES FOR STATEMENTS OF CASH FLOWS, CONTINUED:

          Non-cash investing and financing activities of the Company during
          the years ended September 30, 1996, 1995 and 1994 are as follows:

     <TABLE>
     <CAPTION>
                                                     1996          1995          1994
                                                  -----------   -----------   -----------
              <S>                                 <C>           <C>           <C>
              Assumption of other debt payable 
                 in conjunction with purchase of 
                 real estate contracts and mort-
                 gage notes receivable            $    26,823   $   162,597   $    81,451

              Assumption of other debt payable 
                 in conjunction with acquisition 
                 of real estate held for sale                        15,528        63,650

              Real estate held for sale acquired 
                 through foreclosure                1,474,233     1,232,732       437,448

              Loans to facilitate the sale of 
                 real estate                        1,013,314       959,813        81,800

              Exchange of the Company's pre-
                 ferred stock as full considera-
                 tion for Metropolitan preferred 
                 and common stock                                               3,022,425

              Additional paid-in capital resulting 
                 from income tax benefits associated 
                 with the change in tax affiliation                               206,872

              Transfer of securities from held-to-
                 maturity to available-for-sale       999,204

              Increase in assets and liabilities 
                 associated with purchase of 
                 subsidiaries:
                   Held-to-maturity investment 
                     securities                       493,695     9,401,577
                   Real estate contracts and mort-
                     gage notes receivable                       32,080,899
                   Real estate held for sale                        503,298
                   Deferred costs                                 2,614,778
                   Other assets                       268,044       205,504
                   Annuity reserves                              44,558,959
                   Accounts payable and other 
                     liabilities                                  1,653,970
     </TABLE>
                                              F-39
    <PAGE>
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     16.  FAIR VALUE OF FINANCIAL INSTRUMENTS:

          The following disclosure of the estimated fair value of financial
          instruments is made in accordance with the requirements of
          Statement of Financial Accounting Standards No. 107, "Disclosures
          about Fair Value of Financial Instruments." The estimated fair
          value amounts have been determined using available market
          information and appropriate valuation methodologies. However,
          considerable judgment is necessarily required to interpret market
          data and to develop the estimates of fair value. Accordingly, the
          estimates presented herein are not necessarily indicative of the
          amounts the Company could realize in a current market exchange.
          The use of different market assumptions and/or estimation
          methodologies may have a material effect on the estimated fair
          value amounts.

          The following methods and assumptions were used to estimate the
          fair value of each class of financial instruments for which it is
          practicable to estimate that value. Potential income tax
          ramifications related to the realization of unrealized gains and
          losses that would be incurred in an actual sale and/or settlement
          have not been taken into consideration.

            INVESTMENTS IN AFFILIATED COMPANIES - Fair value is estimated by
            management to equal carrying amounts. The preferred shares are
            not publicly traded; however, preferred share dividends are paid
            at variable rates.

            PUBLICLY TRADED INVESTMENT SECURITIES - Fair value is determined
            by quoted market prices.

            REAL ESTATE CONTRACTS AND MORTGAGE NOTES RECEIVABLE - For loans,
            the discount rate is estimated using rates currently offered for
            loans of similar characteristics that reflect the credit and
            interest rate risk inherent in the loan. For residential
            mortgage loans, fair value is estimated by discounting
            contractual cash flows adjusted for prepayment estimates. The
            prepayment estimates are based upon internal historical data. 

            OTHER RECEIVABLE INVESTMENTS - The fair value of other
            receivable investments is based on the discounted value of
            contractual cash flows. The discount rate is estimated using the
            rates currently offered for investments with similar credit
            ratings and similar remaining maturities.

            INVESTMENT CERTIFICATES AND DEBT PAYABLE - The fair value of
            debenture bonds and debt payable is based on the discounted
            value of contractual cash flows. The discount rate is estimated
            using the rates currently offered for debt with similar
            remaining maturities.


                                      F-40
    <PAGE>
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     16.  FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED:

          The estimated fair values of the following financial instruments
          as of September 30, 1996 are as follows:

                                                Carrying
                                                Amounts       Fair Value
                                                -----------   -----------
            Financial assets:
              Cash and cash equivalents         $ 4,461,315   $ 4,461,315
              Investments:
                Affiliated companies              4,522,475     4,522,475
                Available-for-sale securities       269,305       269,305
                Held-to-maturity securities       7,750,078     7,622,194
              Real estate contracts and 
                mortgage notes receivable        78,932,146    79,426,539
              Other receivable investments       11,788,130    12,404,341
            Financial liabilities:
              Investment certificates - 
                principal and compound 
                interest                         42,148,886    42,545,085
              Debt payable - principal            3,840,375     3,840,375


          LIMITATIONS  - The fair value estimates are made at a discrete
          point in time based on relevant market information and information
          about the financial instruments. Because no market exists for a
          significant portion of these financial instruments, fair value
          estimates are based on judgments regarding future expected loss
          experience, current economic conditions, risk characteristics of
          various financial instruments and other factors. These estimates
          are subjective in nature and involve uncertainties and matters of
          significant judgment and, therefore, cannot be determined with
          precision. Changes in assumptions could significantly affect the
          estimates. Accordingly, the estimates presented herein are not
          necessarily indicative of what the Company could realize in a
          current market exchange. 


     17.  BUSINESS SEGMENT REPORTING:

          The Company principally operates in one industry segment which
          encompasses the investing in real estate contracts and mortgage
          notes receivable, other receivables and investment securities with
          funds generated from the issuance of investment certificates,
          preferred stock and annuity contracts. Additionally, the Company,
          through a wholly owned subsidiary, operates a property development
          division, which provides services related to the selling,
          marketing, designing, subdividing and coordinating of real estate
          development properties.



                                      F-41
    <PAGE>
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     17.  BUSINESS SEGMENT REPORTING, CONTINUED:

          Information about the Company's separate business segments and in
          total as of and for the year ended September 30, 1996 is as
          follows:

                                              Property
                               Primary        Development
                               Operations     Operations     Total
                               ------------   ------------   ------------

            Revenues            $ 12,309,367   $  2,047,082   $ 14,356,449
            Income from opera-
              tions                1,269,143        213,330      1,482,473
            Identifiable assets,
              net                116,817,327        449,353    117,266,680
            Depreciation and
              amortization             3,150          2,616          5,766
            Capital expendi-
              tures                   26,063         47,528         73,591


     18.  PARENT COMPANY ONLY FINANCIAL STATEMENTS:

          The condensed balance sheets of Summit Securities ("Summit "or the
          "parent company") at September 30, 1996 and 1995 are as follows:

    <TABLE>
    <CAPTION>
                                                                 1996           1995
                                                             ------------   ------------
              <S>                                            <C>            <C>
                             ASSETS

              Cash and cash equivalents                     $  1,466,892    $  1,673,584
              Investments                                      4,605,199       3,022,425
              Real estate contracts and mortgage notes 
                 receivable and other receivable investments   29,540,599     34,294,855
              Real estate held for sale                           761,980        269,632
              Equity in subsidiary companies                   10,338,846      3,203,359
              Deferred costs, net                               1,118,781        861,601
              Other assets, net                                    95,953         30,698
              Receivables from affiliates                         513,176
                                                             ------------   ------------
                   Total assets                              $ 48,441,426   $ 43,356,154
                                                             ============   ============
     </TABLE>









                                      F-42
    <PAGE>
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     18.  PARENT COMPANY ONLY FINANCIAL STATEMENTS, CONTINUED:

    <TABLE>
    <CAPTION>
                                                                 1996           1995
                                                             ------------   ------------
              <S>                                            <C>            <C>
                           LIABILITIES

              Investment certificates and accrued interest   $ 42,823,871   $ 38,545,896
              Debt payable                                         38,417        104,636
              Accounts payable and accrued expenses                65,961        170,689
              Payable to affiliates                                              400,964
              Deferred income taxes                               154,403        226,902
                                                             ------------   ------------
                   Total liabilities                           43,082,652     39,449,087
                                                             ------------   ------------
                       STOCKHOLDERS' EQUITY

              Preferred stock, $10 par (liquidation 
                 preference, $4,131,170 and $3,562,220)           413,117        356,222
              Common stock, $10 par                               100,000        100,000
              Additional paid-in capital                        2,269,137      1,786,991
              Retained earnings                                 2,586,654      1,675,738
              Net unrealized losses on investments                (10,134)       (11,884)
                                                             ------------   ------------
                 Total stockholders' equity                     5,358,774      3,907,067
                                                             ------------   ------------

                 Total liabilities and stockholders' equity  $ 48,441,426   $ 43,356,154
                                                             ============   ============
     </TABLE>

          Summit's condensed statements of income for the years ended
          September 30, 1996 and 1995 are as follows:

    <TABLE>
    <CAPTION>
                                                                  1996          1995
                                                              ------------   -----------
              <S>                                              <C>           <C>
              Revenues:
                 Interest and earned discounts                 $ 4,006,818   $ 3,709,749
                 Dividends                                         200,256       256,991
                 Fees, commissions, service and other income        83,375       104,571
                 Real estate sales                                 434,500       941,500
                 Realized net gains on sales of investments
                   and receivables                                 167,301       318,989
                                                              ------------   -----------
                      Total revenues                             4,892,250     5,331,800
                                                              ------------   -----------
     </TABLE>




                                              F-43
    <PAGE>
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     18.  PARENT COMPANY ONLY FINANCIAL STATEMENTS, CONTINUED:
    <TABLE>
    <CAPTION>
                                                                  1996          1995
                                                              ------------   -----------
              <S>                                              <C>           <C>
              Expenses:
                 Interest, net                                   3,710,164     3,251,334
                 Cost of real estate sold                          479,038       929,481
                 Provision for losses on real estate assets          7,353       305,850
                 Salaries and employee benefits                     70,368
                 Other operating expenses                          665,204       335,356
                                                              ------------   -----------
                      Total expenses                             4,932,127     4,822,021
                                                              ------------   -----------
              Income (loss) from operations before income 
                 taxes and equity in net income of 
                 subsidiaries                                      (39,877)      509,779
              Income tax benefit (provision)                        55,956      (128,014)
                                                              ------------   -----------
              Income (loss) before equity in net income 
                 of subsidiaries                                    16,079       381,785
              Equity in net income of subsidiaries               1,228,443       205,794
                                                              ------------   -----------
              Net income                                      $  1,244,522   $   587,559
                                                              ============   ===========
     </TABLE>
            Summit's condensed statements of cash flows for the years ended 
            September 30, 1996 and 1995 are as follows:
     <TABLE>
     <CAPTION>
                                                                  1996          1995
                                                               ------------  -----------
              <S>                                              <C>           <C>
              Cash flows from operating activities:
                 Net income                                    $ 1,244,522   $   587,559
                 Adjustments to reconcile net income to net
                   cash provided by operating activities        (2,343,987)    1,198,232
                                                               ------------  -----------
                      Net cash provided by (used in) 
                        operating activities                    (1,099,465)    1,785,791
                                                               ------------  -----------

     </TABLE>









                                      F-44

    <PAGE>
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     18.  PARENT COMPANY ONLY FINANCIAL STATEMENTS, CONTINUED:

    <TABLE>
    <CAPTION>
                                                                  1996          1995
                                                              ------------   -----------
              <S>                                              <C>           <C>
              Cash flows from investing activities:
                 Principal payments on real estate contracts 
                   and mortgage notes receivable and other 
                   receivable investments                        7,334,388     4,534,137
                 Proceeds from sales of real estate contracts 
                   and mortgage notes receivable and other 
                   receivable investments                       11,684,033    14,996,805
                 Acquisition of real estate contracts and 
                   mortgage notes and other receivable 
                   investments                                 (13,719,365)  (25,763,742)
                 Proceeds from real estate sales                    37,323       117,710
                 Purchase of investments                        (1,582,774)
                 Additions to real estate held for sale           (211,464)      (75,353)
                 Net change in investment in and advances to
                   subsidiaries                                 (6,819,434)   (2,661,218)
                                                               ------------  -----------
                      Net cash used in investing activities     (3,277,293)   (8,851,661)
                                                               ------------  -----------
     </TABLE>
























                                      F-45
    <PAGE>
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     18.  PARENT COMPANY ONLY FINANCIAL STATEMENTS, CONTINUED:

    <TABLE>
    <CAPTION>
                                                                  1996          1995
                                                               ------------  -----------
              <S>                                              <C>           <C>
              Cash flows from financing activities:
                 Net borrowings (repayments) from banks and 
                   others                                          (93,016)     (193,631)
                 Debt issuance costs                              (662,402)     (476,697)
                 Issuance of investment certificates            13,291,967     8,585,470
                 Repayment of investment certificates           (8,571,918)   (2,847,347)
                 Issuance of preferred stock                       539,041       371,956
                 Cash dividends                                   (333,606)     (309,061)
                                                               ------------  -----------
                      Net cash provided by financing 
                        activities                               4,170,066     5,130,690
                                                               ------------  -----------
              Net decrease in cash and cash equivalents           (206,692)   (1,935,180)
              Cash and cash equivalents at beginning of year     1,673,584     3,608,764
                                                               ------------  -----------
              Cash and cash equivalents at end of year         $ 1,466,892   $ 1,673,584
                                                               ===========   ===========

     </TABLE>
          Non-cash investing and financing activities not included in
          Summit's condensed statements of cash flows for the years ended
          September 30, 1996 and 1995 are as follows:

    <TABLE>
    <CAPTION>
                                                                  1996          1995
                                                              ------------   -----------
              <S>                                              <C>           <C>
              Loans to facilitate the sale of real estate      $   297,177   $   823,790
              Real estate acquired through foreclosure             901,175       933,534
              Debt assumed with acquisition of real estate 
                 contracts and mortgage notes and debt assumed 
                 upon foreclosure of real estate contracts          26,823       178,125
              Change in net unrealized gains (losses) on
                 investments                                         1,750       (11,884)
     </TABLE>

          Accounting policies followed in the preparation of the preceding
          condensed financial statements of Summit (parent company only) are
          the same as those policies described in the consolidated financial
          statements except that the equity method was used in accounting
          for the investments in and net income from subsidiaries. 






                                      F-46

    <PAGE>
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


     18.  PARENT COMPANY ONLY FINANCIAL STATEMENTS, CONTINUED:

          At September 30, 1996 and 1995, Summit's debt payable consists of
          the following:

    <TABLE>
    <CAPTION>
                                                                  1996          1995
                                                              ------------   -----------
              <S>                                              <C>           <C>
              Real estate contracts and mortgage notes 
                 payable, interest rates ranging from 7% 
                 to 8.5%, due in installments through 
                 2002; collateralized by senior liens
                 on certain of the Company's real estate 
                 contracts, mortgage notes and real estate 
                 held for sale                                 $    37,875   $   104,067

              Accrued interest payable                                 542           569
                                                               -----------   -----------
                                                               $    38,417   $   104,636
                                                               ===========   ===========
     </TABLE>

          Aggregate amounts of principal payments due on the parent
          company's debt payable are expected to be as follows:

            Fiscal Year Ending
              September 30,
            ------------------           

                  1997                              $11,200
                  1998                               11,600
                  1999                               11,600
                  2000                                1,800
                  2001                                1,800
                Thereafter                              417
                                                    -------
                                                    $38,417
                                                    =======





                                      F-47
    <PAGE>
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     18.  PARENT COMPANY ONLY FINANCIAL STATEMENTS, CONTINUED:

          At September 30, 1996 and 1995, Summit's investment certificates
          consisted of the following:

    <TABLE>
    <CAPTION>
                                       Principally
              Annual Interest Rates    Maturing in               1996           1995
              ---------------------    -------------------   ------------   ------------
              <S>                      <C>                   <C>            <C>
              6% to 7%                 1997 and 1998         $  1,547,283   $    810,558
              7% to 8%                 1997, 1998 and 1999      1,946,646      1,789,822
              8% to 9%                 1999, 2000 and 2001     26,380,522     22,070,089
              9% to 10%                1997 and 2001            8,370,330      2,831,765
              10% to 11%               1997 and 2001              199,926      6,222,424
                                                             ------------   ------------
                                                               38,444,707     33,724,658
              Compound and accrued interest                     4,379,164      4,821,238
                                                             ------------   ------------
                                                             $ 42,823,871   $ 38,545,896
                                                             ============   ============
     </TABLE>

          Maturities of the parent company's investment certificates are as
          follows:

            Fiscal Year Ending
              September 30,
            ------------------           
                   1997                             $  7,085,000
                   1998                                9,834,000
                   1999                                8,361,000
                   2000                                6,822,000
                   2001                               10,528,000
                Thereafter                               193,871
                                                    ------------
                                                    $ 42,823,871
                                                    ============





                                      F-48
    <PAGE>
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     18.  PARENT COMPANY ONLY FINANCIAL STATEMENTS, CONTINUED:

          Summit had the following related party transactions with its
          various subsidiaries and affiliated entities:
    <TABLE>
    <CAPTION>
                                                                  1996          1995
                                                               -----------   -----------
              <S>                                              <C>           <C>
              Real estate contracts, mortgage notes and 
                 other receivable investments purchased 
                 through Metropolitan or affiliates            $12,098,944   $27,624,227

              Contract acquisition costs charged to the 
                 Company on purchased real estate contracts, 
                 mortgage notes and other receivable 
                 investments, including management under-
                 writing fees                                      531,643     1,177,978
                                                               -----------   -----------
              Total costs of real estate contracts, 
                 mortgage notes and other receivable
                 investments purchased through Metropolitan    $12,630,587   $28,802,205
                                                               ===========   ===========
              Proceeds on sales of real estate contracts, 
                 mortgage notes and other receivable 
                 investments to Metropolitan affiliates        $   555,633   $13,345,563

              Realized net gains on sale of receivables 
                 to Metropolitan affiliates                             --       206,947

              Commissions capitalized as deferred costs, 
                 paid to a Metropolitan affiliate on sale 
                 of investment certificates                             --        86,491

              Commissions deducted from additional paid-in 
                 capital, paid to a Metropolitan affiliate 
                 on sale of preferred stock                             --        13,249

              Dividends received on Metropolitan's 
                 preferred stock investments                       200,256       256,991

     </TABLE>






                                               F-49
<PAGE>


<PAGE>                        Page 59

Item   9.     Changes  in  and  Disagreements  with  Accountants  on  Accounting
and Financial Disclosure.

          N/A

                              PART III

Item 10.  Directors and Executive Officers of Registrant.

          See "Management" under Item 1.

Item 11.  Executive Compensation.

          See "Executive Compensation" under Item 1.

Item    12.     Security   Ownership   of   Certain   Beneficial   Owners    and
Management.

               See "Principal Shareholders" under Item 1.

Item 13.  Certain Relationships and Related Transactions.

          See "Certain Transactions" under Item 1.

<PAGE>                        Page 60


                              PART IV

Item   14.      Exhibits,   Financial  Statement  Schedules   and   Reports   on
Form 8-K.

(a).1. Financial Statements
             Included in Part II, Item 8 of this report:

          Report of Independent Accountants
          Consolidated Balance Sheets at September 30, 1996, and 1995
                     Consolidated   Statements   of   Income   for   the   Years
                  Ended
             September 30, 1996, 1995 and 1994.
                      Consolidated    Statements   of    Stockholders'    Equity
                  for the
                                  Years   Ended   September   30,   1996,   1995
                      and 1994
                       Consolidated  Statements  of Cash  Flows  for  the  Years
            Ended  September 30, 1996, 1995 and 1994
          Notes to Consolidated Financial Statements

(a).2. Financial Statements Schedules

                 Included in Part IV of this report:

                               Report    of    Independent    Accountants     on
                Financial Statement Schedules.

                    Schedule   II        Valuation   and   Qualifying   Accounts
and Reserves
                 Schedule IV      Mortgage Loans on Real Estate
                 Schedule XV    -- Summary of Investments other than
                                Investments in Related Parties
                 Schedule XVI   Summary Insurance Information


               Other   Schedules  are  omitted  because  of   the   absence   of
               conditions   under   which   they   are   required   or   because
               the    required   information   is   given   in   the   financial
               statements or notes thereto.

(a).3. Exhibits

             3.       Articles     of    Incorporation    of    the     Company.
             (Exhibit 3(a) to (Registration No. 33-36775).

             3(b).        Bylaws   of   the   Company.    (Exhibit    3(b)    to
             Registration No. 33-36775).

             <PAGE>                        Page 61



             4(a).        Indenture    dated   as   of   November    15,    1990
             between   Summit   and  West  One  Bank,  Idaho,   N.A.,   Trustee.
             (Exhibit 4(a) to Registration No. 33-36775).

             4(b).       Amendment   to   Indenture   dated   as   of   November
             15,   1990   between  Summit  and  West  One  Bank,  Idaho,   N.A.,
             Trustee. (Exhibit 4(b) to Registration No. 33-36775).

             4(c).        Tri-Party   Agreement   dated   as   of   April    24,
             1996   between   West   One   Bank,   First   Trust   and   Summit,
             appointing   First   Trust   as   successor   Trustee.     (Exhibit
             4.c to Registration No. 333-19787).

             4(d).         Statement     of     Rights,     Designations     and
             Preferences   of   Variable   Rate   Cumulative   Preferred   Stock
             Series S-1. (Exhibit 4.c to Registration No. 33-57619)

             4(e).         Statement     of     Rights,     Designations     and
             Preferences   of   Variable   Rate   Cumulative   Preferred   Stock
             Series S-2.  (Exhibit 4.c to Registration No. 333-115)

             4(f).         Statement     of     Rights,     Designations     and
             Preferences   of   Variable   Rate   Cumulative   Preferred   Stock
             Series   S-RP.  (Exhibit  4.f  to  Form  10-K  file   January   13,
             1997)

             10(a).         Receivable     Management,      Acquisition      and
             Service    Agreement   between   Summit   Securities,   Inc.    and
             Metropolitan    Mortgage    &   Securities    Co.,    Inc.    dated
             September 9, 1994.
                  (Exhibit 10.(a) to Registration No. 33-57619).

             10(b).         Receivable     Management,      Acquisition      and
             Service    Agreement   between   Old   Standard   Life    Insurance
             Company    and    Metropolitan   Mortgage   &    Securities    Co.,
             Inc.    dated    December    31,   1994.    (Exhibit    10(b)    to
             Registration No. 33-57619).

             10(c).         Receivable     Management,      Acquisition      and
             Service     Agreement     between    Arizona     Life     Insurance
             Company    and    Metropolitan   Mortgage   &    Securities    Co.,
             Inc.     dated    October    10,    1996.    (Exhibit    4.c     to
             Registration No. 333-19787)

             11.     Statement   Re   Computation   of   Earnings   Per   Common
             Share. (See Financial Statements.)


             <PAGE>                        Page 62

             *12. Statement re computation of ratios

             *21. Subsidiaries of Registrant

             23.    Consent   of   Experts,   See   Item   14(a)2.   Report   of
             Independent      Accountants      on      Finanical       Statement
             Schedules.

             *27. Financial Data Schedule

*Filed herewith

      (d).   Reports on Form 8-K

                    No   Form   8-K   filings   were  made   during   the   last
             quarter  of  the  period  covered  by  this  report.   A  Form   8-
             K   was   filed  December  10,  1996  subsequent  to   the   period
             covered   by   this  report  which  disclosed  the   sale   through
             a    securitization    of   approximately    11.25    million    in
             first     line    residential    mortgages,    as    more     fully
             described in such Form 8-K.
                                  
<PAGE>                        Page 63
                                  
                  REPORT OF INDEPENDENT ACCOUNTANTS
                                  
                  ON FINANCIAL STATEMENT SCHEDULES

The Directors and Stockholder
Summit Securities, Inc.

Our    report   on   the   consolidated   financial   statements    of    Summit
Securities,   Inc.  and  subsidiaries  is  included  in  Item  8   herein.    In
connection  with  our  audits  of  such  financial  statements,  we  have   also
audited   the  related  financial  statement  schedules  listed   in   Item   14
of this Amended Form 10-K.

In    our   opinion,   these   1996   financial   statement   schedules,    when
considered   in  relation  to  the  basic  financial  statements  taken   as   a
whole,   present   fairly,   in   all   material   respects,   the   information
required to be included therein.


                       /s/ COOPERS & LYBRAND

                          Coopers & Lybrand


Spokane, Washington
                                                                December 6, 1996
                                                                                
<PAGE>                        Page 68
                                                                                
                   SUMMIT SECURITIES, INC. AND SUBSIDIARIES          Schedule II
                  VALUATION AND QUALIFYING ACCOUNTS
           YEARS ENDED SEPTEMBER 30, 1996, 1995, AND 1994
                                  
<TABLE>
<CAPTION>

                              Additions  Additions   Deductions
                   Balance at from       (Reductions)          andBalance
                   Beginning  AcquisitionCharged to  Accounts  at end of
                   of Year        of     Costs and   Written   Year
                              SubsidiariesExpenses        Off
Description                                          (Recovery)

<S>                <C>        <C>        <C>         <C>          <C>
Allowances for
Losses Deducted from
Real Estate Contracts
and Mortgage Notes
Receivable on
Balance Sheet
        1996       $765,130   $     --   $212,600    $ 3,243    $974,487
        1995        250,572   310,957     103,950    (99,651)   765,130
        1994       96,654         ---     103,000    (50,918)    250,572

Allowances for
Losses Deducted
from Real Estate
Held for Sale on
Balance Sheet
        1996       $91,139    $    --    $277,482    $161,836   $206,785
        1995         50,300    11,591     341,431     312,183     91,139
        1994        6,757         ---      52,042       8,499     50,300


Allowance for
Losses on Accounts and
Notes Receivable
Deducted from
Other Assets on
Balance Sheet
         1996      $  408        $ --     $12,000     $ 2,033     $10,375
         1995       4,055         320       7,200      11,167        408
         1994         ---         ---       5,500       1,445      4,055

</TABLE>

<PAGE>                        Page 69



Schedule IV
                             SUMMIT SECURITIES, INC.
                          MORTGAGE LOANS ON REAL ESTATE
                               September 30, 1996
<TABLE>
<CAPTION>

Real  estate contracts and mortgage notes ("Receivables") are located throughout
the  United States. Approximately 22% of the face value of Summit's real  estate
contracts  and mortgage notes receivable are collateralized by property  located
in  the  Pacific  Northwest  (Washington, Alaska, Idaho,  Montana  and  Oregon),
approximately  25%  by  property located in the Pacific  Southwest  (California,
Nevada  and  Arizona),  approximately 9% by property located  in  the  Southeast
(Florida, Georgia, North Carolina and South Carolina) and approximately  15%  by
property located in the Southwest (Texas, Louisiana and New Mexico).  Less  than
1% of the contracts are subject to variable interest rates.  Interest rate range
from 0% to 19% with rate principally (77%) within the range of 8% to 13%.

                        Number                Carrying   Delinquent   Number of
                          of      Interest   Amount of   Principal    Delinquent
Description          Receivables   Rates    Receivables    Amount    Receivables
                      ----------  --------  -----------  ----------  -----------
RESIDENTIAL                     Principally
<S>             <C>       <C>       <C>         <C>              <C>         <C>
First Mortgage >$75,000    145     8%-11%      $15,930,198      $828,311     7
First Mortgage >$40,000    320     8%-11%       17,166,794       803,473    14
First Mortgage <$40,000    874     8%-11%       16,824,319     1,079,313    45
Second or Lower>$75,000      8     7%-12%          855,475            --    --
Second or Lower>$40,000     44     8%-11%        2,256,793       159,931     3
Second or Lower<$40,000    246     8%-11%        4,940,151       162,486    10

COMMERCIAL
First Mortgage >$75,000     72     8%-11%       10,626,674        95,843     1

<PAGE>                        Page 66

First Mortgage >$40,000     42     8%-10%        2,371,163       139,722     2
First Mortgage <$40,000     83     8%-18%        1,110,029         8,389     1
Second or Lower>$75,000      9     8%-11%          819,760            --    --
Second or Lower>$40,000      9     9%-11%          520,949            --    --
Second or Lower<$40,000     17     9%-11%          415,212        38,314     1

FARM, LAND AND OTHER
First Mortgage >$75,000     26     8%-12%        3,577,173            --    --
First Mortgage >$40,000     56     8%-11%        2,946,202        59,218     1
First Mortgage <$40,000    100     8%-11%        2,363,282            --    --
Second or Lower>$75,000      3     7%-12%          416,737            --    --
Second or Lower>$40,000      5     7%-12%          241,564            --    --
Second or Lower<$40,000     13     8%-10%          283,609            --    --

Unrealized discounts, net
of unamortized acquisition
costs, on Receivables
purchased at a discount                         (4,733,938)

Accrued Interest Receivable                      2,051,094

Allowance for Losses                              (974,487)
                                               -----------   -----------
TOTAL                                          $80,008,753    $3,375,000
                                               ===========   ===========
<FN>
The  principal  amount  of  Receivables subject  to  delinquent  principal  or
interest is defined as being in arrears for more than three months.
</TABLE>

<TABLE>

<PAGE>                        Page 67

<CAPTION>
The  contractual  maturities  of the aggregate amounts  of  Receivables  (face
amount) are as follows:

                              Residential      Commercial   Farm, Land, other    Total
                                 Principal       Principal      Principal      Principal
                                  --------        -------        --------      ---------
<S>                            <C>            <C>            <C>            <C>
October 1996 - September 1999  $ 5,120,711    $ 2,156,175    $ 1,987,478     $ 9,264,364
October 1999 - September 2001    4,740,273      3,048,183      2,170,013       9,958,469
October 2001 - September 2003    5,297,759      1,497,998        939,294       7,735,051
October 2003 - September 2006    8,976,772      3,068,355      1,472,159      13,517,286
October 2006 - September 2011   12,348,635      4,287,359      1,829,649      18,465,643
October 2011 - September 2016    7,034,413        793,847        371,051       8,199,311
October 2016 - Thereafter       14,455,167      1,011,870      1,058,923      16,525,960
                               -----------    -----------     ----------     -----------
                               $57,973,730    $15,863,787     $9,828,567     $83,666,084
                               ===========    ===========     ==========     ===========
</TABLE>

<PAGE>                        Page 68

                                          Schedule IV Continued
                             SUMMIT SECURITIES, INC.
                          MORTGAGE LOANS ON REAL ESTATE
                               September 30, 1996
<TABLE>
<CAPTION>
                                      1996           1995           1994
<S>                                    <C>            <C>            <C>
Balance at beginning
  of period                    $60,117,219    $27,282,991    $19,527,225
                               -----------     ----------     ----------

Additions during period
New Subsidiary Acquisition             ---     32,080,899            ---

New Receivable - Cash           40,100,330     26,130,804     20,177,705

Loans to facilitate the
  sale of real estate
  held - non cash                1,013,314        959,813         81,800

Assumption of other debt
  payable in conjunction with
  acquisition of new
  receivables - non cash            26,823        162,597         81,451

Increase in Accrued Interest     1,005,273        388,167            ---
                                 ---------      ---------      ---------
Total Additions                 42,145,740     59,722,280     20,340,956

<PAGE>                        Page 69

                                ----------     ----------     ----------
Deductions During Period

Collections of Principal
  cash                          13,874,707      6,567,012      1,829,515

Cost of Receivables Sold         6,711,562     19,578,720     10,221,375

Foreclosures - non cash          1,458,580      1,083,277        272,959

Decrease in Accrued Interest           ---            ---        107,423

Discount Amortization                  ---      (544,558)            ---

Increase in Allowances
  for Losses                       209,357        203,601        153,918
                                ----------     ----------      ---------
Total Deductions                22,254,206     26,888,052     12,585,190
                                ----------     ----------      ---------
Balance at  End of Period      $80,008,753    $60,117,219    $27,282,991
                                ==========     ==========     ==========
</TABLE>

<PAGE>                        Page 74


                                                                     Schedule XV
                                                                                
                             SUMMIT SECURITIES, INC.
                             SUMMARY OF INVESTMENTS
                    OTHER THAN INVESTMENTS IN RELATED PARTIES
                               September 30, 1996
<TABLE>
<CAPTION>

<S>                 <C>            <C>            <C>
Column A            Column B       Column C       Column D
                                                  Amount at Which
                    Amortized      Market         Shown on Balance
                    Cost           Value               Sheet

TYPE OF INVESTMENTS

FIXED MATURITIES

Investments:
  U.S. Government and
  Government Agencies
    and Authorities$  5,735,579  $5,624,439    $  5,735,579
  Corporate Bonds  2,014,499      1,997,755       2,014,499
  Mortgage Backed Bond269,305       269,305         269,305
                  ----------     ----------      ----------
TOTAL FIXED MATURITIES$  8,019,383$7,891,499   $  8,019,383
                  ==========     ==========      ==========
Real Estate Contracts
   and Mortgage Notes
     Receivable $ 80,008,753                   $ 80,008,753
                  ==========                     ==========
Other Investment
   Receivables  $ 11,788,130                   $ 11,788,130

<PAGE>                        Page 75

                  ==========                     ==========

Real Estate Held
   for Sale     $  1,191,495                   $  1,191,495
                  ==========                     ==========

Other Assets -
   Policy Loans $      9,066                   $      9,066
                 ===========                    ===========

TOTAL INVESTMENTS$101,016,827                  $101,016,827
                 ===========                    ===========
</TABLE>

<PAGE>                        Page 76


                     SUMMIT SECURITIES, INC. AND SUBSIDIARIES       Schedule XVI
                    SUMMARY INSURANCE INFORMATION
<TABLE>
<CAPTION>
                                 Future
                                 Policy
                                 Benefits                     Other
                   Deferred      Losses                       Policy
                   Policy        Claims                       Claims and
                   Acquisition   and Loss      Unearned       Benefits
                   Cost          Expense       Premiums       Payable
<S>
September 30, 1996
                    <C>         <C>             <C>           <C>
Annuities         $3,853,136  $62,439,855      $     --      $      --
                  ==========  ===========      ========      =========
September 30, 1995
Annuities         $2,755,523  $49,559,589      $     --      $      --
                  ==========  ===========      ========      =========

<CAPTION>
                                         Benefits    Amortization
                                         Claims      of Deferred
                               Net       Losses and  Policy       Other
                     Premium   Investment            Settlement
Acquisition        Operating
                     Revenue   Income    Expenses    Costs        Expenses
<S>
September 30, 1996
                    <C>      <C>         <C>           <C>        <C>
Annuities         $45,348  $5,163,811  $3,702,324     $84,733   $345,892
                   ======   =========   =========     =======   ========

September 30, 1995
Annuities         $14,179  $1,344,850  $1,034,082    $198,190    $73,715
                  =======  ==========  ==========    ========    =======
</TABLE>

<PAGE>                        Page 77

                             SIGNATURES

Pursuant  to  the  requirements of Section 13  or  15(d)  of  the
Securities  Exchange Act of 1934, the registrant has duly  caused
this  report  to  be  signed on its behalf  by  the  undersigned,
thereunto duly authorized.

             SUMMIT SECURITIES, INC.

               /S/ Tom Turner
             By__________________       May 7, 1997
             Tom Turner, President      Date

Pursuant  to the requirements of the Securities Exchange  Act  of
1934,  this report has been signed below by the following persons
in the capacities and on the dates indicated:

Signature             Title                           Date



/S/ Tom Turner
_________________________
President/Director      May 7, 1997
Tom Turner


/S/ Philip Sandifur
_________________________                                    Vice
President/Director      May 7, 1997
Philip Sandifur


/S/ Greg Gordon                                    May 7, 1997
_________________________
Secretary/Treasurer
Greg Gordon             Director

/S/ Steven Crooks
________________________                                Principal
Financial               May 7, 1997
Steven Crooks           Officer, Principal
                        Accounting Officer